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U.S. SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549



FORM 10-Q



|x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ---------------------------------------------------------------------------------------



For the quarterly period ended June 30, 2005



| ̈ | Transition Report Under Section 13 or 15(d) of the Exchange Act
|- | ---------------------------------------------------------------



For the transition period from
 to



Commission File Number 0-22439



FISHER COMMUNICATIONS, INC.

(Exact Name
of Registrant as Specified in Its Charter)



|                                                              |  |                                       
|------------------------------------------------------------- |  | --------------------------------------
|WASHINGTON                                                    |  | 91-0222175                            
|(State or Other Jurisdiction ofIncorporation or Organization) |  | (I.R.S. EmployerIdentification Number)



100 Fourth Ave. N

Suite 510

Seattle, Washington 98109

(Address of Principal Executive Offices) (Zip Code)



(206) 404-7000

(Registrants Telephone Number, Including Area Code)



Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  No ̈



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x  No ̈



Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date:



Common Stock, $1.25 par value, outstanding as of August 1, 2005: 8,694,981



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##### Table of Contents



PART I

FINANCIAL INFORMATION



Item 1. Financial Statements



The following Condensed Consolidated Financial Statements (unaudited) are presented for the Registrant, Fisher Communications, Inc., and its subsidiaries.



|                          |  |                                                                                      |  |   
|------------------------- |  | ------------------------------------------------------------------------------------ |  | --
|1.                        |  | Condensed Consolidated Statements of Operations:                                     |  | 3 
|                          |  | Three and six months ended June 30, 2005 and 2004                                    |  |   
|                          |  |                                                                                     
|2.                        |  | Condensed Consolidated Balance Sheets:                                               |  | 4 
|                          |  | June 30, 2005 and December 31, 2004                                                  |  |   
|                          |  |                                                                                     
|3.                        |  | Condensed Consolidated Statements of Cash Flows:                                     |  | 5 
|                          |  | Six months ended June 30, 2005 and 2004                                              |  |   
|                          |  |                                                                                     
|4.                        |  | Condensed Consolidated Statements of Comprehensive Income:                           |  | 6 
|                          |  | Three and six months ended June 30, 2005 and 2004                                    |  |   
|                          |  |                                                                                     
|5.                        |  | Notes to Condensed Consolidated Financial Statements                                 |  | 7 
|                          |  |                                                                                     
|Item 2.                   |  | Managements Discussion and Analysis of Financial Position and Results of Operations |  | 21
|Item 3.                   |  | Quantitative and Qualitative Disclosures about Market Risks                          |  | 35
|Item 4.                   |  | Controls and Procedures                                                              |  | 35
|                          | 
|PART II OTHER
INFORMATION |  |                                                                                     
|                          |  |                                                                                     
|Item 1.                   |  | Legal Proceedings                                                                    |  | 36
|Item 2.                   |  | Unregistered Sales of Equity Securities and Use of Proceeds                          |  | 36
|Item 3.                   |  | Defaults upon Senior Securities                                                      |  | 36
|Item 4.                   |  | Submission of Matters to a Vote of Security Holders                                  |  | 36
|Item 5.                   |  | Other Information                                                                    |  | 36
|Item 6.                   |  | Exhibits                                                                             |  | 37
|                          | 
|SIGNATURES                |  | 38                                                                                  
|EXHIBIT INDEX             |  | 39                                                                                  



2



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##### Table of Contents

ITEM 1  FINANCIAL STATEMENTS



FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS



|                                                                                                                                          |  |                         |         |   |      |   |                           |   |  |      |  |   |        |   |  |   |        |  
|----------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | ------- | - | ---- | - | ------------------------- | - |  | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                                                                                          |  | Six months endedJune 30 |         |   |      |   | Three months endedJune 30 |  
|                                                                                                                                          |  | 2005                    |         |   | 2004 |   |                           |   |  | 2005 |  |   | 2004   |  
|                                                                                                                                          |  |                         |         |   |      |   |                          
|(in thousands, except per-share amounts)                                                                                                  |  |                         |         |   |      |   |                           |   |  |      |  |   |        |   |  |   |        |  
|                                                                                                                                          |  |                         |         |   |     
|(Unaudited)                                                                                                                               |  |                         |         |   |      |   |                           |   |  |      |  |   |        |   |  |   |        |  
|Revenue                                                                                                                                   |  | $                       | 71,079  |   |      | $ | 71,266                    |   |  |      |  | $ | 40,122 |   |  | $ | 40,374 |  
|                                                                                                                                          |  |                         |         |   |      |   |                          
|Costs and expenses                                                                                                                        |  |                         |         |   |      |   |                           |   |  |      |  |   |        |   |  |   |        |  
|Cost of services sold (exclusive of depreciation reported separately below, amounting to $6,506, $7,025, $3,020 and $3,384,
respectively) |  |                         | 37,242  |   |      |   | 33,579                    |   |  |      |  |   | 20,619 |   |  |   | 18,520 |  
|Selling expenses                                                                                                                          |  |                         | 13,329  |   |      |   | 13,514                    |   |  |      |  |   | 7,451  |   |  |   | 7,151  |  
|General and administrative expenses                                                                                                       |  |                         | 17,795  |   |      |   | 17,976                    |   |  |      |  |   | 7,920  |   |  |   | 8,797  |  
|Depreciation and amortization                                                                                                             |  |                         | 7,751   |   |      |   | 8,315                     |   |  |      |  |   | 3,622  |   |  |   | 4,104  |  
|                                                                                                                                          |  |                         |         |   |      |   |                          
|                                                                                                                                          |  |                         | 76,117  |   |      |   | 73,384                    |   |  |      |  |   | 39,612 |   |  |   | 38,572 |  
|                                                                                                                                          |  |                         |         |   |      |   |                          
|Income (loss) from operations                                                                                                             |  |                         | (5,038  | ) |      |   | (2,118                    | ) |  |      |  |   | 510    |   |  |   | 1,802  |  
|Net loss on derivative instruments                                                                                                        |  |                         |         |   |      |   | (10,545                   | ) |  |      |  |   |        |   |  |   | (1,373 | )
|Other income, net                                                                                                                         |  |                         | 1,781   |   |      |   | 1,467                     |   |  |      |  |   | 931    |   |  |   | 664    |  
|Interest expense                                                                                                                          |  |                         | (6,775  | ) |      |   | (5,767                    | ) |  |      |  |   | (3,404 | ) |  |   | (2,643 | )
|                                                                                                                                          |  |                         |         |   |      |   |                          
|Loss from continuing operations before income taxes                                                                                       |  |                         | (10,032 | ) |      |   | (16,963                   | ) |  |      |  |   | (1,963 | ) |  |   | (1,550 | )
|Benefit for federal and state income taxes                                                                                                |  |                         | (3,874  | ) |      |   | (5,806                    | ) |  |      |  |   | (873   | ) |  |   | (106   | )
|                                                                                                                                          |  |                         |         |   |      |   |                          
|Loss from continuing operations                                                                                                           |  |                         | (6,158  | ) |      |   | (11,157                   | ) |  |      |  |   | (1,090 | ) |  |   | (1,444 | )
|Loss from discontinued operations, net of income taxes                                                                                    |  |                         |         |   |      |   | (132                      | ) |  |      |  |   |        |   |  |   |        |  
|                                                                                                                                          |  |                         |         |   |      |   |                          
|Net loss                                                                                                                                  |  | $                       | (6,158  | ) |      | $ | (11,289                   | ) |  |      |  | $ | (1,090 | ) |  | $ | (1,444 | )
|                                                                                                                                          |  |                         |         |   |      |   |                          
|                                                                                                                                          |  |                         |         |   |     
|Loss per share:                                                                                                                           |  |                         |         |   |      |   |                           |   |  |      |  |   |        |   |  |   |        |  
|From continuing operations                                                                                                                |  | $                       | (0.71   | ) |      | $ | (1.30                     | ) |  |      |  | $ | (0.13  | ) |  | $ | (0.17  | )
|From discontinued operations                                                                                                              |  |                         |         |   |      |   | (0.01                     | ) |  |      |  |   |        |   |  |   |        |  
|                                                                                                                                          |  |                         |         |   |      |   |                          
|Net loss per share                                                                                                                        |  | $                       | (0.71   | ) |      | $ | (1.31                     | ) |  |      |  | $ | (0.13  | ) |  | $ | (0.17  | )
|                                                                                                                                          |  |                         |         |   |      |   |                          
|                                                                                                                                          |  |                         |         |   |     
|Loss per share assuming dilution:                                                                                                         |  |                         |         |   |      |   |                           |   |  |      |  |   |        |   |  |   |        |  
|From continuing operations                                                                                                                |  | $                       | (0.71   | ) |      | $ | (1.30                     | ) |  |      |  | $ | (0.13  | ) |  | $ | (0.17  | )
|From discontinued operations                                                                                                              |  |                         |         |   |      |   | (0.01                     | ) |  |      |  |   |        |   |  |   |        |  
|                                                                                                                                          |  |                         |         |   |      |   |                          
|Net loss per share assuming dilution                                                                                                      |  | $                       | (0.71   | ) |      | $ | (1.31                     | ) |  |      |  | $ | (0.13  | ) |  | $ | (0.17  | )
|                                                                                                                                          |  |                         |         |   |      |   |                          
|                                                                                                                                          |  |                         |         |   |     
|Weighted average shares outstanding                                                                                                       |  |                         | 8,658   |   |      |   | 8,615                     |   |  |      |  |   | 8,690  |   |  |   | 8,619  |  
|                                                                                                                                          |  |                         |         |   |     
|Weighted average shares outstanding assuming dilution                                                                                     |  |                         | 8,658   |   |      |   | 8,615                     |   |  |      |  |   | 8,690  |   |  |   | 8,619  |  



See
accompanying notes to condensed consolidated financial statements.



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##### Table of Contents

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS



|                                                                                                            |  |             |         |   |                 |   |         |  
|----------------------------------------------------------------------------------------------------------- |  | ----------- | ------- | - | --------------- | - | ------- | -
|                                                                                                            |  | June 302005 |         |   | December 312004 |  
|                                                                                                            | 
|(in thousands, except share and per-share amounts)                                                          |  |             |         |   |                 |   |         |  
|                                                                                                            |  |            
|(Unaudited)                                                                                                 |  |             |         |   |                 |   |         |  
|ASSETS                                                                                                      |  |             |         |   |                 |   |         |  
|Current Assets                                                                                              |  |             |         |   |                 |   |         |  
|Cash and cash equivalents                                                                                   |  | $           | 10,471  |   |                 | $ | 16,025  |  
|Receivables, net                                                                                            |  |             | 28,642  |   |                 |   | 28,539  |  
|Income taxes receivable                                                                                     |  |             | 3,661   |   |                 |   | 3,355   |  
|Deferred income taxes                                                                                       |  |             | 1,158   |   |                 |   | 631     |  
|Prepaid expenses                                                                                            |  |             | 4,254   |   |                 |   | 3,653   |  
|Television and radio broadcast rights                                                                       |  |             | 3,204   |   |                 |   | 8,398   |  
|                                                                                                            | 
|Total current assets                                                                                        |  |             | 51,390  |   |                 |   | 60,601  |  
|Marketable securities, at market value                                                                      |  |             | 163,149 |   |                 |   | 157,102 |  
|Cash value of life insurance and retirement deposits                                                        |  |             | 14,819  |   |                 |   | 14,971  |  
|Television and radio broadcast rights                                                                       |  |             | 2,614   |   |                 |   | 3,086   |  
|Goodwill, net                                                                                               |  |             | 38,354  |   |                 |   | 38,354  |  
|Intangible assets                                                                                           |  |             | 1,244   |   |                 |   | 1,244   |  
|Investment in equity investee                                                                               |  |             | 2,842   |   |                 |   | 2,825   |  
|Prepaid financing fees and other assets                                                                     |  |             | 6,558   |   |                 |   | 7,396   |  
|Property, plant and equipment, net                                                                          |  |             | 146,435 |   |                 |   | 150,293 |  
|                                                                                                            | 
|Total Assets                                                                                                |  | $           | 427,405 |   |                 | $ | 435,872 |  
|                                                                                                            | 
|                                                                                                            |  |            
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                        |  |             |         |   |                 |   |         |  
|Current Liabilities                                                                                         |  |             |         |   |                 |   |         |  
|Notes payable                                                                                               |  | $           |         |   |                 | $ | 53      |  
|Trade accounts payable                                                                                      |  |             | 2,780   |   |                 |   | 3,755   |  
|Accrued payroll and related benefits                                                                        |  |             | 5,120   |   |                 |   | 7,331   |  
|Interest payable                                                                                            |  |             | 3,773   |   |                 |   | 3,630   |  
|Television and radio broadcast rights payable                                                               |  |             | 2,160   |   |                 |   | 7,419   |  
|Other current liabilities                                                                                   |  |             | 3,793   |   |                 |   | 5,232   |  
|                                                                                                            | 
|Total current liabilities                                                                                   |  |             | 17,626  |   |                 |   | 27,420  |  
|Long-term debt                                                                                              |  |             | 150,000 |   |                 |   | 150,000 |  
|Accrued retirement benefits                                                                                 |  |             | 19,755  |   |                 |   | 18,967  |  
|Deferred income taxes                                                                                       |  |             | 35,040  |   |                 |   | 36,133  |  
|Other liabilities                                                                                           |  |             | 1,159   |   |                 |   | 899     |  
|                                                                                                            |  |            
|Commitments and Contingencies                                                                               |  |             |         |   |                 |   |         |  
|                                                                                                            |  |            
|Stockholders Equity                                                                                        |  |             |         |   |                 |   |         |  
|Common stock, shares authorized 12,000,000, $1.25 par value; issued 8,694,981 in 2005 and 8,618,781 in 2004 |  |             | 10,869  |   |                 |   | 10,773  |  
|Capital in excess of par                                                                                    |  |             | 7,985   |   |                 |   | 4,535   |  
|Accumulated other comprehensive income, net of income taxes:                                                |  |             |         |   |                 |   |         |  
|Unrealized gain on marketable securities                                                                    |  |             | 105,384 |   |                 |   | 101,400 |  
|Minimum pension liability                                                                                   |  |             | (2,208  | ) |                 |   | (2,208  | )
|Retained earnings                                                                                           |  |             | 81,795  |   |                 |   | 87,953  |  
|                                                                                                            | 
|Total Stockholders Equity                                                                                  |  |             | 203,825 |   |                 |   | 202,453 |  
|                                                                                                            | 
|Total Liabilities and Stockholders Equity                                                                  |  | $           | 427,405 |   |                 | $ | 435,872 |  
|                                                                                                            | 



See
accompanying notes to condensed consolidated financial statements.



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FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                                                              |  |                         |        |   |      |   |         |  
|------------------------------------------------------------------------------------------------------------- |  | ----------------------- | ------ | - | ---- | - | ------- | -
|                                                                                                              |  | Six months endedJune 30 |       
|                                                                                                              |  | 2005                    |        |   | 2004 |  
|                                                                                                              | 
|(in thousands)                                                                                                |  |                         |        |   |      |   |         |  
|                                                                                                              |  |                        
|(Unaudited)                                                                                                   |  |                         |        |   |      |   |         |  
|Cash flows from operating activities                                                                          |  |                         |        |   |      |   |         |  
|Net loss                                                                                                      |  | $                       | (6,158 | ) |      | $ | (11,289 | )
|Adjustments to reconcile net loss to net cash used in operating activities                                    |  |                         |        |   |      |   |         |  
|Depreciation and amortization                                                                                 |  |                         | 7,751  |   |      |   | 8,315   |  
|Deferred income taxes                                                                                         |  |                         | (3,740 | ) |      |   | (1,953  | )
|Equity in operations of equity investees                                                                      |  |                         | (17    | ) |      |   | (26     | )
|Amortization of deferred loan costs                                                                           |  |                         | 326    |   |      |   | 334     |  
|Decrease in fair value of derivative instruments                                                              |  |                         |        |   |      |   | 10,545  |  
|Interest accrued on forward sale transaction                                                                  |  |                         |        |   |      |   | 2,531   |  
|Amortization of television and radio broadcast rights                                                         |  |                         | 10,410 |   |      |   | 8,906   |  
|Payments for television and radio broadcast rights                                                            |  |                         | (9,987 | ) |      |   | (9,625  | )
|Other                                                                                                         |  |                         | 350    |   |      |   | 282     |  
|Change in operating assets and liabilities                                                                    |  |                         |        |   |      |   |         |  
|Receivables                                                                                                   |  |                         | (1,049 | ) |      |   | (889    | )
|Prepaid expenses                                                                                              |  |                         | (602   | ) |      |   | 24      |  
|Cash value of life insurance and retirement deposits                                                          |  |                         | 152    |   |      |   | (13     | )
|Other assets                                                                                                  |  |                         | (40    | ) |      |   | 510     |  
|Trade accounts payable, accrued payroll and related benefits, interest payable, and other current liabilities |  |                         | (4,482 | ) |      |   | (6,196  | )
|Income taxes receivable and payable                                                                           |  |                         | (306   | ) |      |   | (9,454  | )
|Accrued retirement benefits                                                                                   |  |                         | 788    |   |      |   | 862     |  
|Other liabilities                                                                                             |  |                         | 245    |   |      |   | (444    | )
|                                                                                                              | 
|Net cash used in operating activities                                                                         |  |                         | (6,359 | ) |      |   | (7,580  | )
|                                                                                                              | 
|Cash flows from investing activities                                                                          |  |                         |        |   |      |   |         |  
|Proceeds from collection of notes receivable                                                                  |  |                         | 1,585  |   |      |   |         |  
|Proceeds from sale of marketable securities                                                                   |  |                         | 247    |   |      |   |         |  
|Purchase of property, plant and equipment                                                                     |  |                         | (3,955 | ) |      |   | (1,355  | )
|                                                                                                              | 
|Net cash used in investing activities                                                                         |  |                         | (2,123 | ) |      |   | (1,355  | )
|                                                                                                              | 
|Cash flows from financing activities                                                                          |  |                         |        |   |      |   |         |  
|Payments under notes payable                                                                                  |  |                         | (53    | ) |      |   | (120    | )
|Borrowings under borrowing agreements                                                                         |  |                         |        |   |      |   | 11,000  |  
|Payments on borrowing agreements                                                                              |  |                         |        |   |      |   | (1,898  | )
|Payments to terminate forward transaction tranche                                                             |  |                         |        |   |      |   | (2,500  | )
|Payment of deferred loan costs                                                                                |  |                         | (87    | ) |      |   | (265    | )
|Proceeds from exercise of stock options                                                                       |  |                         | 3,068  |   |      |   | 427     |  
|                                                                                                              | 
|Net cash provided by financing activities                                                                     |  |                         | 2,928  |   |      |   | 6,644   |  
|                                                                                                              | 
|Net decrease in cash and cash equivalents                                                                     |  |                         | (5,554 | ) |      |   | (2,291  | )
|Cash and cash equivalents, beginning of period                                                                |  |                         | 16,025 |   |      |   | 12,996  |  
|                                                                                                              | 
|Cash and cash equivalents, end of period                                                                      |  | $                       | 10,471 |   |      | $ | 10,705  |  
|                                                                                                              | 



See
accompanying notes to condensed consolidated financial statements.



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FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME



|                                                                 |  |                          |        |   |      |   |                           |   |  |      |  |   |        |   |  |   |        |  
|---------------------------------------------------------------- |  | ------------------------ | ------ | - | ---- | - | ------------------------- | - |  | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                 |  | Six months ended June 30 |        |   |      |   | Three months endedJune 30 |  
|                                                                 |  | 2005                     |        |   | 2004 |   |                           |   |  | 2005 |  |   | 2004   |  
|                                                                 |  |                          |        |   |      |   |                          
|(in thousands)                                                   |  |                          |        |   |      |   |                           |   |  |      |  |   |        |   |  |   |        |  
|                                                                 |  |                          |        |   |     
|(Unaudited)                                                      |  |                          |        |   |      |   |                           |   |  |      |  |   |        |   |  |   |        |  
|Net loss                                                         |  | $                        | (6,158 | ) |      | $ | (11,289                   | ) |  |      |  | $ | (1,090 | ) |  | $ | (1,444 | )
|                                                                 |  |                          |        |   |     
|Other comprehensive income (loss):                               |  |                          |        |   |      |   |                           |   |  |      |  |   |        |   |  |   |        |  
|Unrealized gain on marketable securities                         |  |                          | 6,294  |   |      |   | 15,223                    |   |  |      |  |   | 16,890 |   |  |   | 2,643  |  
|Effect of income taxes                                           |  |                          | (2,204 | ) |      |   | (5,329                    | ) |  |      |  |   | (5,912 | ) |  |   | (926   | )
|Less: Reclassification adjustment for gains included in net loss |  |                          | (106   | ) |      |   |                           |   |  |      |  |   | (106   | ) |  |   |        |  
|                                                                 |  |                          |        |   |      |   |                          
|                                                                 |  |                          | 3,984  |   |      |   | 9,894                     |   |  |      |  |   | 10,872 |   |  |   | 1,717  |  
|                                                                 |  |                          |        |   |      |   |                          
|Comprehensive income (loss)                                      |  | $                        | (2,174 | ) |      | $ | (1,395                    | ) |  |      |  | $ | 9,782  |   |  | $ | 273    |  
|                                                                 |  |                          |        |   |      |   |                          



See
accompanying notes to condensed consolidated financial statements.



6



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FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



|1. | Basis of Presentation
|-- | ---------------------



The unaudited financial information furnished herein, in the opinion of management, reflects all adjustments which are necessary to state fairly the consolidated financial position, results of operations, and cash
flows of Fisher Communications, Inc. and its consolidated subsidiaries (the Company) as of and for the periods indicated. Any adjustments are of a normal recurring nature. Fisher Communications, Inc.s principal wholly owned
subsidiaries include Fisher Broadcasting Company and Fisher Media Services Company. The Company presumes that users of the interim financial information herein have read or have access to the Companys audited consolidated financial statements
and that the adequacy of additional disclosure needed for a fair presentation, except in regard to material contingencies or recent subsequent events, may be determined in that context. Accordingly, footnote and other disclosures which would
substantially duplicate the disclosures contained in the Companys Annual Report on Form 10-K for the year ended December 31, 2004 filed by the Company have been omitted. The financial information herein is not necessarily representative of a
full years operations.



|2. | Recent Accounting Pronouncements
|-- | --------------------------------



In September 2004, the Financial Accounting Standards Boards (FASB) Emerging Issues Task Force discussed Topic D-108, Use of the Residual Method
to Value Acquired Assets Other Than Goodwill. EITF Topic D-108 clarifies that a residual valuation method is not appropriate to value acquired assets other than goodwill. The guidance is to be applied no later than the beginning of the first
fiscal year that begins after December 15, 2004. The transition to EITF Topic D-108 requires that registrants that have applied the residual method to value intangible assets shall perform an impairment test on those intangible assets using the
direct value method no later than the beginning of the first fiscal year beginning after December 15, 2004. The adoption of this new rule had no impact on the Companys financial statements because the Company has no intangible assets
originally valued under the residual method.



In December 2004, the FASB issued
Statement of Financial Accounting Standard (SFAS) No. 123R, Accounting for Stock-Based Compensation. SFAS 123R requires that companies recognize a calculated expense for equity-based compensation. The new rules were to be
effective for interim and annual periods beginning after June 15, 2005; however, in April 2005, the SEC amended the required implementation date to the beginning of a companys next fiscal year. Therefore, the Company intends to adopt the
standard in 2006. SFAS 123R provides for different transition methods upon adoption. As a result of SFAS 123R, the Company plans to begin recognizing expense for stock-related compensation; however, the Company has not yet determined the transition
methodology, nor is the Company able to predict the expected impact on its financial position or results of operations as a result of adopting this Standard.



In December 2004, the FASB issued SFAS 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions. The
amendments made by SFAS 153 are based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. Further, the amendments eliminate the narrow exception for nonmonetary exchanges of
similar productive assets and replace it with a broader exception for exchanges of nonmonetary assets that do not have commercial substance. The new rules are effective for interim and annual periods beginning after June 15, 2005. The Company does
not believe these rules will materially affect its financial position, results of operations or cash flows.



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In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections  a replacement of APB
Opinion No. 20 and FASB Statement No. 3. SFAS No. 154 changes the requirements for the accounting for and reporting of a change in accounting principle. This statement applies to all voluntary changes in accounting principle, and also applies
to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years
beginning after December 15, 2005.



|3. | Discontinued Operations
|-- | -----------------------



On December 1, 2003, Fisher Broadcasting Company completed the sale of substantially all of the assets of its two Georgia television stations, WFXG-TV, Augusta and WXTX-TV, Columbus, and recognized a gain on sale of
$12.5 million; net proceeds from the sale were $40.7 million. In the first quarter of 2004, an adjustment to the purchase price of $132,000, net of tax effect, was made, resulting from revision of estimates of working capital at the closing date.



|4. | Senior Notes and Senior Credit Facility
|-- | ---------------------------------------



On September 20, 2004, the Company completed an offering of $150.0 million of 8.625% senior notes due 2014. The notes are unconditionally guaranteed, jointly and
severally, on an unsecured, senior basis by the current and future material domestic subsidiaries of the Company. Interest on the notes is payable semiannually in arrears on March 15 and September 15 of each year.



Except as described below the notes are not redeemable at the Companys option prior to
September 15, 2009. On or after September 15, 2009, the Company may redeem all or a part of the notes at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest thereon, to the applicable
redemption date, if redeemed during the twelve-month period beginning on September 15 of the years indicated below:



|                    |  |            |  
|------------------- |  | ---------- | -
|Year                |  | Percentage |  
|2009                |  | 104.3125   | %
|2010                |  | 102.8750   | %
|2011                |  | 101.4375   | %
|2012 and thereafter |  | 100.0000   | %



Notwithstanding the foregoing, at any
time prior to September 15, 2007, the Company may redeem up to 35% of the aggregate principal amount of notes issued under the indenture at a redemption price of 108.625% of the principal amount thereof, plus accrued and unpaid interest thereon to
the redemption date, with the net cash proceeds of one or more public equity offerings as further described in the indenture under which the notes were issued.



The indenture under which the notes were issued contains covenants that, among other things, limit the Companys ability to:



| |  |  | incur additional indebtedness;
| | - |  | ------------------------------



| |  |  | make certain asset dispositions;
| | - |  | --------------------------------



| |  |  | make investments or other restricted payments;
| | - |  | ----------------------------------------------



| |  |  | pay dividends or make other distributions on, redeem or repurchase, capital stock;
| | - |  | ----------------------------------------------------------------------------------



| |  |  | issue capital stock of the Companys restricted subsidiaries;
| | - |  | -------------------------------------------------------------



| |  |  | enter into transactions with affiliates or related persons;
| | - |  | -----------------------------------------------------------



| |  |  | incur certain liens on assets to secure debt; and
| | - |  | -------------------------------------------------



| |  |  | enter into a merger, sale or consolidation.
| | - |  | -------------------------------------------



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These covenants are subject to a number of important qualifications and exceptions as described in the indenture. Of the
total cash proceeds of $144.5 million, net of transaction costs, $143.9 million was used to retire the Companys broadcasting subsidiarys credit facility and the Companys media services subsidiarys credit facility, and to
settle the outstanding obligations under the Companys variable forward sales transaction. The variable forward sales transaction was terminated effective November 4, 2004.



On September 20, 2004, the Company also entered into a new six-year senior credit facility (the Revolver). The Revolver provides
for borrowings up to $20.0 million and is collateralized by substantially all of the Companys assets (excluding certain real property and the Companys investment in shares of Safeco Corporation common stock) and by all of the voting
stock of its subsidiaries. The Revolver places limitations on various aspects of the Companys operations (including, among other things, the payment of dividends to Company stockholders and the Companys ability to consolidate, merge or
sell a substantial part of its assets), requires compliance with a cash flow ratio, and requires prepayment upon the occurrence of certain events. Amounts borrowed under the Revolver bear interest at variable rates based at the Companys
option, on either (1) the LIBOR rate plus a margin of 300 basis points, or (2) the higher of the prime rate plus 175 basis points or the overnight federal funds rate plus 225 basis points. The Company was in compliance with all debt covenant
requirements at June 30, 2005, and no amounts were outstanding under the Revolver at June 30, 2005



|5. | Derivative Instruments
|-- | ----------------------



On March 21, 2002, the Company entered into a variable forward sales transaction (the Forward Transaction) with a financial institution. Proceeds from the Forward Transaction were used to repay prior debt,
to finance construction of Fisher Plaza, and for general corporate purposes. The Companys obligations under the Forward Transaction were collateralized by shares of Safeco Corporation common stock owned by the Company. A portion of the Forward
Transaction was considered a derivative and, as such, the Company periodically measured its fair value and recognized the derivative as an asset or a liability. The change in the fair value of the derivative was recorded in the statement of
operations.



On April 28, 2004, the Company terminated one tranche of the
Forward Transaction with a maturity date of March 15, 2007. In connection with the termination, the Company paid a termination fee of $2.5 million, of which $2.1 million had been recognized as a derivative instrument liability as of March 31, 2004.
The remaining $436,000 was recognized as a loss on termination in the second quarter of 2004. In addition, the Company recognized $212,000 in interest expense to write-off the remaining unamortized expenses related to the terminated tranche.



On November 4, 2004, the Company terminated all remaining tranches of the
Forward Transaction. In connection with the termination, the Company paid a termination fee of $16.1 million. As a result of the termination, all shares of Safeco Corporation common stock owned by the Company became unencumbered.



In connection with a previous broadcast borrowing facility, the broadcasting subsidiary
entered into an interest rate swap agreement fixing the interest rate at 6.87%, plus a margin based on the broadcasting subsidiary's ratio of consolidated funded debt to consolidated EBITDA, on a portion of the floating-rate debt outstanding under
the broadcast borrowing facility. The swap expired in the first quarter of 2004, resulting in a gain of $907,000 which is included in net loss on derivative instruments in the accompanying Consolidated Statement of Operations.



|6. | Television and Radio Broadcast Rights and Other Broadcast Commitments
|-- | ---------------------------------------------------------------------



The Company acquires television and radio broadcast rights, and may make commitments for program rights where the cost exceeds the projected direct revenue from the
program. The impact of such contracts on the Companys overall financial results is dependent on a number of factors, including popularity of the program, increased competition from other programming, and strength of the advertising market.
Estimates of future revenues can change significantly and, accordingly, are reviewed periodically to determine whether impairment is expected over the life of the contract.



At June 30, 2005, the Company had commitments under license agreements amounting to $56.3 million for future rights to broadcast television
and radio programs through 2010, and $7.3 million in related fees. As these programs will not be available for broadcast until after June 30, 2005, they have been excluded from the financial statements in accordance with provisions of SFAS No. 63,
Financial Reporting by Broadcasters. In 2002, the broadcasting subsidiary acquired exclusive rights to sell available advertising time for a radio station in Seattle (Joint Sales



9



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##### Table of Contents

Agreement). Under the Joint Sales Agreement, the broadcasting subsidiary has commitments for monthly payments totaling $7.2 million through 2007.



|7. | Retirement Benefits
|-- | -------------------



The Company has a noncontributory supplemental retirement program for key management. No new participants have been admitted to this program since 2001. The program provides for vesting of benefits under certain
circumstances. Funding is not required, but generally the Company has acquired annuity contracts and life insurance on the lives of the individual participants to assist in payment of retirement benefits. The Company is the owner and beneficiary of
such policies; accordingly, the cash values of the policies as well as the accrued liability are reported in the financial statements. The program requires continued employment through the date of expected retirement.



In June 2005, the program was amended to freeze accrual of all benefits to active
participants provided under the program. As a result, the Company recorded a charge of $451,000 in the second quarter of 2005 as a curtailment loss associated with an unrecognized transition obligation that was required to be recognized at the
effective date of the program amendment. The Company will continue to recognize periodic pension cost related to the program, but the amount is expected to be lower as a result of the curtailment.



Components of the net and total periodic pension cost for the Companys supplemental
retirement plan include the following (in thousands):



|                                      |  |                          |       |                            |   |      |  |      |     |  |   |    
|------------------------------------- |  | ------------------------ | ----- | -------------------------- | - | ---- |  | ---- | --- |  | - | ---
|                                      |  | Six months ended June 30 |       | Three months ended June 30
|                                      |  | 2005                     |       | 2004                       |   | 2005 |  | 2004
|Service cost                          |  | $                        | 80    |                            | $ | 146  |  | $    | 40  |  | $ | 73 
|Interest cost                         |  |                          | 534   |                            |   | 548  |  |      | 267 |  |   | 274
|Amortization of transition obligation |  |                          | 52    |                            |   | 52   |  |      | 26  |  |   | 26 
|Amortization of loss                  |  |                          | 123   |                            |   | 106  |  |      | 61  |  |   | 53 
|Net periodic pension cost             |  |                          | 789   |                            |   | 852  |  |      | 394 |  |   | 426
|Curtailment loss recognized           |  |                          | 451   |                            |   |      |  |      | 451 |  |   |    
|Total pension cost                    |  | $                        | 1,240 |                            | $ | 852  |  | $    | 845 |  | $ | 426



Assumptions used to determine net
periodic pension costs are as follows:



|                              |  |      |   |  |      |  
|----------------------------- |  | ---- | - |  | ---- | -
|                              |  | 2005 |   |  | 2004 |  
|                              |  |      |   |  |      |  
|Discount Rate                 |  | 5.74 | % |  | 6.25 | %
|Rate of Compensation increase |  | 3.00 | % |  | 3.00 | %



The curtailment loss was calculated
based on a current discount rate of 5.02% and no future compensation increases.



|8. | Income (loss) Per Share
|-- | -----------------------



Net income (loss) per share represents net income (loss) divided by the weighted average number of shares outstanding during the period. Net income (loss) per share assuming dilution represents net income (loss)
divided by the weighted average number of shares outstanding, including the potentially dilutive impact of stock options and restricted stock rights issued under the Companys incentive plans. Common stock options and restricted stock rights
are converted using the treasury stock method.



10



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##### Table of Contents

The weighted average number of shares outstanding for the six months ended June 30, 2005 was 8,658,083. The dilutive
effect of 1,000 restricted stock rights and options to purchase 347,005 shares are excluded for the six-month period ended June 30, 2005, because such rights and options were anti-dilutive due to the net loss for the period; therefore, there is no
difference in the calculation between basic and diluted per-share amounts.



The
weighted average number of shares outstanding for the six months ended June 30, 2004 was 8,615,341. The dilutive effect of 60 restricted stock rights and options to purchase 488,830 shares are excluded for the six-month period ended June 30, 2004,
because such rights and options were anti-dilutive due to the net loss for the period; therefore, there is no difference in the calculation between basic and diluted per-share amounts.



|9. | Stock-Based Compensation
|-- | ------------------------



The Company accounts for common stock options and restricted common stock rights in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations (APB 25). No stock-based compensation is generally reflected in net loss, as all options granted had an exercise price equal to the market value of the underlying common stock on the date of grant.



The following table illustrates the effect on net loss and net loss per share if the Company
had applied the fair value recognition provisions of SFAS No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation (in thousands, except per-share amounts):



|                                                                                                                                                     |  |                          |        |   |                            |   |         |      |  |   |        |   |  |   |        |  
|---------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------ | ------ | - | -------------------------- | - | ------- | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                                                                                                     |  | Six months ended June 30 |        |   | Three months ended June 30 |  
|                                                                                                                                                     |  | 2005                     |        |   | 2004                       |   |         | 2005 |  |   | 2004   |  
|                                                                                                                                                     |  |                          |        |   |                            |   |         |     
|Net loss, as reported                                                                                                                                |  | $                        | (6,158 | ) |                            | $ | (11,289 | )    |  | $ | (1,090 | ) |  | $ | (1,444 | )
|Add stock-based employee compensation expense included in net loss as reported                                                                       |  |                          | 197    |   |                            | $ | 28      |      |  |   |        |   |  | $ | 28     |  
|Deduct total stock-based employee compensation expense determined under the fair value based method for all awards, net of related income tax
effect |  |                          | (181   | ) |                            |   | (685    | )    |  |   | (159   | ) |  |   | (353   | )
|                                                                                                                                                     |  |                          |        |   |                            |   |         |      |  |   |        |   |  |   |        |  
|                                                                                                                                                     |  |                          |        |  
|Adjusted net loss                                                                                                                                    |  | $                        | (6,142 | ) |                            | $ | (11,946 | )    |  | $ | (1,249 | ) |  | $ | (1,769 | )
|                                                                                                                                                     |  |                          |        |   |                            |   |         |      |  |   |        |   |  |   |        |  
|                                                                                                                                                     |  |                          |        |  
|Loss per share:                                                                                                                                      |  |                          |        |   |                            |   |         |      |  |   |        |   |  |   |        |  
|As reported                                                                                                                                          |  | $                        | (0.71  | ) |                            | $ | (1.31   | )    |  | $ | (0.13  | ) |  | $ | (0.17  | )
|Adjusted                                                                                                                                             |  | $                        | (0.71  | ) |                            | $ | (1.39   | )    |  | $ | (0.14  | ) |  | $ | (0.21  | )
|                                                                                                                                                     |  |                          |        |  
|Loss per share assuming dilution:                                                                                                                    |  |                          |        |   |                            |   |         |      |  |   |        |   |  |   |        |  
|As reported                                                                                                                                          |  | $                        | (0.71  | ) |                            | $ | (1.31   | )    |  | $ | (0.13  | ) |  | $ | (0.17  | )
|Adjusted                                                                                                                                             |  | $                        | (0.71  | ) |                            | $ | (1.39   | )    |  | $ | (0.14  | ) |  | $ | (0.21  | )



During the first quarter of 2005, the
Company entered into a severance agreement with its former chief executive officer. The agreement provided certain benefits, including the acceleration of vesting of certain unvested common stock options held by the executive. The Company accounted
for the modification under the provisions of APB 25, and recognized an after-tax expense of $197,000 ($303,000 pre-tax) in the first quarter of 2005. The Company recognized total pre-tax expense of approximately $1.0 million in the first quarter of
2005 relating to severance expenses for the Companys former chief executive officer.



|10. | Segment Information
|--- | -------------------



The Company reports financial data for three reportable segments: television, radio, and Fisher Plaza. The television reportable segment includes the operations of the Companys nine network-affiliated television
stations, and a 50% interest in a company that owns a tenth television station. The radio reportable segment includes the operations of the Companys 27 radio stations. Corporate expenses of the broadcasting business unit are allocated to the
television and radio reportable segments based on a ratio that approximates historic revenue and operating expenses of the segments. The Fisher Plaza reportable segment includes the operations of a communications center located near



11



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downtown Seattle that serves as home of the Companys Seattle television and radio operations, the Companys corporate offices, and third-party
tenants.



Revenue for each reportable segment is as follows (in thousands):



|                           |  |                         |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|-------------------------- |  | ----------------------- | ------ | - | ------------------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                           |  | Six monthsended June 30 |        |   | Three monthsended June 30 |  
|                           |  |                         |        |   |                           |   |        |     
|                           |  | 2005                    |        |   | 2004                      |   |        | 2005 |  |   | 2004   |  
|                           |  |                         |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Television                 |  | $                       | 44,196 |   |                           | $ | 46,106 |      |  | $ | 23,370 |   |  | $ | 24,372 |  
|Radio                      |  |                         | 22,992 |   |                           |   | 23,225 |      |  |   | 14,727 |   |  |   | 15,156 |  
|Fisher Plaza               |  |                         | 3,996  |   |                           |   | 1,977  |      |  |   | 2,078  |   |  |   | 880    |  
|Corporate and eliminations |  |                         | (105   | ) |                           |   | (42    | )    |  |   | (53    | ) |  |   | (34    | )
|                           |  |                         |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Continuing operations      |  | $                       | 71,079 |   |                           | $ | 71,266 |      |  | $ | 40,122 |   |  | $ | 40,374 |  
|                           |  |                         |        |   |                           |   |        |      |  |   |        |   |  |   |        |  



Income (loss) before interest and
income taxes for each reportable segment is as follows (in thousands):



|                                                                                        |  |                         |        |   |                           |   |         |      |  |   |        |   |  |   |        |  
|--------------------------------------------------------------------------------------- |  | ----------------------- | ------ | - | ------------------------- | - | ------- | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                                        |  | Six monthsended June 30 |        |   | Three monthsended June 30 |  
|                                                                                        |  |                         |        |   |                           |   |         |     
|                                                                                        |  | 2005                    |        |   | 2004                      |   |         | 2005 |  |   | 2004   |  
|                                                                                        |  |                         |        |   |                           |   |         |      |  |   |        |   |  |   |        |  
|Television                                                                              |  | $                       | 1,435  |   |                           | $ | 5,541   |      |  | $ | 2,486  |   |  | $ | 4,334  |  
|Radio                                                                                   |  |                         | (437   | ) |                           |   | 698     |      |  |   | 480    |   |  |   | 1,496  |  
|Fisher Plaza                                                                            |  |                         | 102    |   |                           |   | (1,757  | )    |  |   | 178    |   |  |   | (1,087 | )
|Corporate and eliminations                                                              |  |                         | (4,357 | ) |                           |   | (15,678 | )    |  |   | (1,703 | ) |  |   | (3,650 | )
|                                                                                        |  |                         |        |   |                           |   |         |      |  |   |        |   |  |   |        |  
|Total segment income (loss) from continuing operations before interest and income taxes |  |                         | (3,257 | ) |                           |   | (11,196 | )    |  |   | 1,441  |   |  |   | 1,093  |  
|Discontinued operations                                                                 |  |                         |        |   |                           |   | (207    | )    |  |   |        |   |  |   |        |  
|                                                                                        |  |                         |        |   |                           |   |         |      |  |   |        |   |  |   |        |  
|                                                                                        |  | $                       | (3,257 | ) |                           | $ | (11,403 | )    |  | $ | 1,441  |   |  | $ | 1,093  |  
|                                                                                        |  |                         |        |   |                           |   |         |      |  |   |        |   |  |   |        |  



The following table reconciles total
segment income (loss) from continuing operations before interest and income taxes shown above to consolidated loss from continuing operations before income taxes (in thousands):



|                                                                                        |  |                         |         |   |                           |   |         |      |  |   |        |   |  |   |        |  
|--------------------------------------------------------------------------------------- |  | ----------------------- | ------- | - | ------------------------- | - | ------- | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                                        |  | Six monthsended June 30 |         |   | Three monthsended June 30 |  
|                                                                                        |  |                         |         |   |                           |   |         |     
|                                                                                        |  | 2005                    |         |   | 2004                      |   |         | 2005 |  |   | 2004   |  
|                                                                                        |  |                         |         |   |                           |   |         |      |  |   |        |   |  |   |        |  
|Total segment income (loss) from continuing operations before interest and income taxes |  | $                       | (3,257  | ) |                           | $ | (11,196 | )    |  | $ | 1,441  |   |  | $ | 1,093  |  
|Interest expense, net                                                                   |  |                         | (6,775  | ) |                           |   | (5,767  | )    |  |   | (3,404 | ) |  |   | (2,643 | )
|                                                                                        |  |                         |         |   |                           |   |         |      |  |   |        |   |  |   |        |  
|Consolidated loss from continuing operations before income taxes                        |  | $                       | (10,032 | ) |                           | $ | (16,963 | )    |  | $ | (1,963 | ) |  | $ | (1,550 | )
|                                                                                        |  |                         |         |   |                           |   |         |      |  |   |        |   |  |   |        |  



Identifiable assets for each
reportable segment are as follows (in thousands):



|                           |  |              |         |                  |   |        
|-------------------------- |  | ------------ | ------- | ---------------- | - | -------
|Total assets               |  | June 30,2005 |         | December 31,2004
|                           |  |              |         |                  |   |        
|Television                 |  | $            | 80,079  |                  | $ | 93,799 
|Radio                      |  |              | 45,027  |                  |   | 44,048 
|Fisher Plaza               |  |              | 120,611 |                  |   | 122,579
|Corporate and eliminations |  |              | 181,688 |                  |   | 175,446
|                           |  |              |         |                  |   |        
|Continuing operations      |  | $            | 427,405 |                  | $ | 435,872
|                           |  |              |         |                  |   |        



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Identifiable assets by reportable segment are those assets used in the operations of each segment. Corporate assets are
principally marketable securities.



|11. | Financial Information for Guarantors
|--- | ------------------------------------



On September 20, 2004, the Company completed an offering of $150.0 million of 8.625% senior notes due 2014. The notes are unconditionally guaranteed, jointly and
severally, on an unsecured, senior basis by the wholly owned subsidiaries of the Company.



Presented below are condensed consolidated statements of operations for the three and six months ended June, 30, 2005 and 2004, and cashflows for the six months ended June 30, 2005 and 2004. Also presented are the
condensed consolidated balance sheets as of June 30, 2005 and December 31, 2004. The condensed consolidated information is presented for the Company (issuer) with its investments accounted for under the equity method, the wholly owned guarantor
subsidiaries, eliminations, and the Company on a consolidated basis. The Company (issuer) information consists primarily of corporate oversight and administrative personnel and related activities, as well as certain investments in marketable
securities.



Financial Information for Guarantors

Condensed Consolidated Statement of Operations

for the six months ended June 30, 2005



|                                                             |  |                             |         |   |                                     |   |              |  |   |                                              |   |  |   |         |  
|------------------------------------------------------------ |  | --------------------------- | ------- | - | ----------------------------------- | - | ------------ |  | - | -------------------------------------------- | - |  | - | ------- | -
|                                                             |  | Fisher Communications, Inc. |         |   | Wholly Owned Guarantor Subsidiaries |   | Eliminations |  |   | Fisher Communications, Inc. and Subsidiaries |  
|                                                             | 
|(in thousands)                                               |  |                             |         |   |                                     |   |              |  |   |                                              |   |  |   |         |  
|                                                             |  |                             |         |  
|Revenue                                                      |  | $                           |         |   |                                     | $ | 71,193       |  | $ | (114                                         | ) |  | $ | 71,079  |  
|                                                             |  |                             |         |  
|Costs and expenses                                           |  |                             |         |   |                                     |   |              |  |   |                                              |   |  |   |         |  
|Cost of services sold                                        |  |                             |         |   |                                     |   | 36,464       |  |   | 778                                          |   |  |   | 37,242  |  
|Selling expenses                                             |  |                             |         |   |                                     |   | 13,329       |  |   |                                              |   |  |   | 13,329  |  
|General and administrative expenses                          |  |                             | 5,686   |   |                                     |   | 13,001       |  |   | (892                                         | ) |  |   | 17,795  |  
|Depreciation and amortization                                |  |                             | 134     |   |                                     |   | 7,617        |  |   |                                              |   |  |   | 7,751   |  
|                                                             | 
|                                                             |  |                             | 5,820   |   |                                     |   | 70,411       |  |   | (114                                         | ) |  |   | 76,117  |  
|                                                             | 
|Income (loss) from operations                                |  |                             | (5,820  | ) |                                     |   | 782          |  |   |                                             |   |  |   | (5,038  | )
|                                                             |  |                             |         |  
|Other income, net                                            |  |                             | 1,405   |   |                                     |   | 376          |  |   |                                              |   |  |   | 1,781   |  
|                                                             |  |                             |         |  
|Equity in income of subsidiaries                             |  |                             | 777     |   |                                     |   |              |  |   | (777                                         | ) |  |   |        |  
|                                                             |  |                             |         |  
|Interest expense                                             |  |                             | (6,775  | ) |                                     |   |              |  |   |                                              |   |  |   | (6,775  | )
|                                                             | 
|Income (loss) from continuing operations before income taxes |  |                             | (10,413 | ) |                                     |   | 1,158        |  |   | (777                                         | ) |  |   | (10,032 | )
|Provision (benefit) for federal and state income taxes       |  |                             | (4,255  | ) |                                     |   | 381          |  |   |                                              |   |  |   | (3,874  | )
|                                                             | 
|Net income (loss)                                            |  | $                           | (6,158  | ) |                                     | $ | 777          |  | $ | (777                                         | ) |  | $ | (6,158  | )
|                                                             | 



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Financial Information for Guarantors

Condensed Consolidated Statement of Operations

for the six months ended June
30, 2004



|                                                             |  |                           |         |   |                                   |   |        |              |  |   |                                           |   |  |   |         |  
|------------------------------------------------------------ |  | ------------------------- | ------- | - | --------------------------------- | - | ------ | ------------ |  | - | ----------------------------------------- | - |  | - | ------- | -
|                                                             |  | FisherCommunications,Inc. |         |   | Wholly OwnedGuarantorSubsidiaries |   |        | Eliminations |  |   | FisherCommunications,Inc. andSubsidiaries |  
|                                                             | 
|(in thousands)                                               |  |                           |         |   |                                   |   |        |              |  |   |                                           |   |  |   |         |  
|                                                             |  |                           |         |  
|Revenue                                                      |  | $                         |         |   |                                   | $ | 71,374 |              |  | $ | (108                                      | ) |  | $ | 71,266  |  
|                                                             |  |                           |         |  
|Costs and expenses                                           |  |                           |         |   |                                   |   |        |              |  |   |                                           |   |  |   |         |  
|Cost of services sold                                        |  |                           |         |   |                                   |   | 32,844 |              |  |   | 735                                       |   |  |   | 33,579  |  
|Selling expenses                                             |  |                           |         |   |                                   |   | 13,514 |              |  |   |                                           |   |  |   | 13,514  |  
|General and administrative expenses                          |  |                           | 4,986   |   |                                   |   | 13,833 |              |  |   | (843                                      | ) |  |   | 17,976  |  
|Depreciation and amortization                                |  |                           | 83      |   |                                   |   | 8,232  |              |  |   |                                           |   |  |   | 8,315   |  
|                                                             | 
|                                                             |  |                           | 5,069   |   |                                   |   | 68,423 |              |  |   | (108                                      | ) |  |   | 73,384  |  
|                                                             | 
|Income (loss) from operations                                |  |                           | (5,069  | ) |                                   |   | 2,951  |              |  |   |                                          |   |  |   | (2,118  | )
|                                                             |  |                           |         |  
|Net gain (loss) on derivative instruments                    |  |                           | (11,452 | ) |                                   |   | 907    |              |  |   |                                           |   |  |   | (10,545 | )
|                                                             |  |                           |         |  
|Other income, net                                            |  |                           | 1,082   |   |                                   |   | 385    |              |  |   |                                           |   |  |   | 1,467   |  
|                                                             |  |                           |         |  
|Equity in income of subsidiaries                             |  |                           | 448     |   |                                   |   |        |              |  |   | (448                                      | ) |  |   |        |  
|                                                             |  |                           |         |  
|Interest expense                                             |  |                           | (2,587  | ) |                                   |   | (3,180 | )            |  |   |                                           |   |  |   | (5,767  | )
|                                                             | 
|Income (loss) from continuing operations before income taxes |  |                           | (17,578 | ) |                                   |   | 1,063  |              |  |   | (448                                      | ) |  |   | (16,963 | )
|                                                             |  |                           |         |  
|Provision (benefit) for federal and state income taxes       |  |                           | (6,289  | ) |                                   |   | 483    |              |  |   |                                           |   |  |   | (5,806  | )
|                                                             | 
|Income (loss) from continuing operations                     |  |                           | (11,289 | ) |                                   |   | 580    |              |  |   | (448                                      | ) |  |   | (11,157 | )
|                                                             |  |                           |         |  
|Loss from discontinued operations, net of income taxes       |  |                           |         |   |                                   |   | (132   | )            |  |   |                                           |   |  |   | (132    | )
|                                                             | 
|Net income (loss)                                            |  | $                         | (11,289 | ) |                                   | $ | 448    |              |  | $ | (448                                      | ) |  | $ | (11,289 | )
|                                                             | 



14



---

##### Table of Contents

Financial Information for Guarantors

Condensed Consolidated Statement of Operations

for the three months ended
June 30, 2005



|                                                             |  |                             |        |   |                                     |   |              |  |   |                                              |   |  |   |        |  
|------------------------------------------------------------ |  | --------------------------- | ------ | - | ----------------------------------- | - | ------------ |  | - | -------------------------------------------- | - |  | - | ------ | -
|                                                             |  | Fisher Communications, Inc. |        |   | Wholly Owned Guarantor Subsidiaries |   | Eliminations |  |   | Fisher Communications, Inc. and Subsidiaries |  
|                                                             | 
|(in thousands)                                               |  |                             |        |   |                                     |   |              |  |   |                                              |   |  |   |        |  
|                                                             |  |                             |        |  
|Revenue                                                      |  | $                           |        |   |                                     | $ | 40,178       |  | $ | (56                                          | ) |  | $ | 40,122 |  
|                                                             |  |                             |        |  
|Costs and expenses                                           |  |                             |        |   |                                     |   |              |  |   |                                              |   |  |   |        |  
|Cost of services sold                                        |  |                             |        |   |                                     |   | 20,234       |  |   | 385                                          |   |  |   | 20,619 |  
|Selling expenses                                             |  |                             |        |   |                                     |   | 7,451        |  |   |                                              |   |  |   | 7,451  |  
|General and administrative expenses                          |  |                             | 2,248  |   |                                     |   | 6,113        |  |   | (441                                         | ) |  |   | 7,920  |  
|Depreciation and amortization                                |  |                             | 65     |   |                                     |   | 3,557        |  |   |                                              |   |  |   | 3,622  |  
|                                                             | 
|                                                             |  |                             | 2,313  |   |                                     |   | 37,355       |  |   | (56                                          | ) |  |   | 39,612 |  
|                                                             | 
|Income (loss) from operations                                |  |                             | (2,313 | ) |                                     |   | 2,823        |  |   |                                             |   |  |   | 510    |  
|                                                             |  |                             |        |  
|Other income, net                                            |  |                             | 735    |   |                                     |   | 196          |  |   |                                              |   |  |   | 931    |  
|                                                             |  |                             |        |  
|Equity in income of subsidiaries                             |  |                             | 1,973  |   |                                     |   |              |  |   | (1,973                                       | ) |  |   |       |  
|                                                             |  |                             |        |  
|Interest expense                                             |  |                             | (3,404 | ) |                                     |   |              |  |   |                                              |   |  |   | (3,404 | )
|                                                             | 
|Income (loss) from continuing operations before income taxes |  |                             | (3,009 | ) |                                     |   | 3,019        |  |   | (1,973                                       | ) |  |   | (1,963 | )
|                                                             |  |                             |        |  
|Provision (benefit) for federal and state income taxes       |  |                             | (1,919 | ) |                                     |   | 1,046        |  |   |                                              |   |  |   | (873   | )
|                                                             | 
|Net income (loss)                                            |  | $                           | (1,090 | ) |                                     | $ | 1,973        |  | $ | (1,973                                       | ) |  | $ | (1,090 | )
|                                                             | 



15



---

##### Table of Contents

Financial Information for Guarantors

Condensed Consolidated Statement of Operations

for the three months ended
June 30, 2004



|                                                             |  |                             |        |   |                                     |   |        |              |  |   |                                              |   |  |   |        |  
|------------------------------------------------------------ |  | --------------------------- | ------ | - | ----------------------------------- | - | ------ | ------------ |  | - | -------------------------------------------- | - |  | - | ------ | -
|                                                             |  | Fisher Communications, Inc. |        |   | Wholly Owned Guarantor Subsidiaries |   |        | Eliminations |  |   | Fisher Communications, Inc. and Subsidiaries |  
|                                                             | 
|(in thousands)                                               |  |                             |        |   |                                     |   |        |              |  |   |                                              |   |  |   |        |  
|                                                             |  |                             |        |  
|Revenue                                                      |  | $                           |        |   |                                     | $ | 40,432 |              |  | $ | (58                                          | ) |  | $ | 40,374 |  
|                                                             |  |                             |        |  
|Costs and expenses                                           |  |                             |        |   |                                     |   |        |              |  |   |                                              |   |  |   |        |  
|Cost of services sold                                        |  |                             |        |   |                                     |   | 18,148 |              |  |   | 372                                          |   |  |   | 18,520 |  
|Selling expenses                                             |  |                             |        |   |                                     |   | 7,151  |              |  |   |                                              |   |  |   | 7,151  |  
|General and administrative expenses                          |  |                             | 2,729  |   |                                     |   | 6,498  |              |  |   | (430                                         | ) |  |   | 8,797  |  
|Depreciation and amortization                                |  |                             | 31     |   |                                     |   | 4,073  |              |  |   |                                              |   |  |   | 4,104  |  
|                                                             | 
|                                                             |  |                             | 2,760  |   |                                     |   | 35,870 |              |  |   | (58                                          | ) |  |   | 38,572 |  
|                                                             | 
|Income (loss) from operations                                |  |                             | (2,760 | ) |                                     |   | 4,562  |              |  |   |                                             |   |  |   | 1,802  |  
|                                                             |  |                             |        |  
|Net loss on derivative instruments                           |  |                             | (1,373 | ) |                                     |   |        |              |  |   |                                              |   |  |   | (1,373 | )
|                                                             |  |                             |        |  
|Other income, net                                            |  |                             | 522    |   |                                     |   | 142    |              |  |   |                                              |   |  |   | 664    |  
|                                                             |  |                             |        |  
|Equity in income of subsidiaries                             |  |                             | 2,199  |   |                                     |   |        |              |  |   | (2,199                                       | ) |  |   |       |  
|                                                             |  |                             |        |  
|Interest expense                                             |  |                             | (1,496 | ) |                                     |   | (1,147 | )            |  |   |                                              |   |  |   | (2,643 | )
|                                                             | 
|Income (loss) from continuing operations before income taxes |  |                             | (2,908 | ) |                                     |   | 3,557  |              |  |   | (2,199                                       | ) |  |   | (1,550 | )
|                                                             |  |                             |        |  
|Provision (benefit) for federal and state income taxes       |  |                             | (1,464 | ) |                                     |   | 1,358  |              |  |   |                                              |   |  |   | (106   | )
|                                                             | 
|Net income (loss)                                            |  | $                           | (1,444 | ) |                                     | $ | 2,199  |              |  | $ | (2,199                                       | ) |  | $ | (1,444 | )
|                                                             | 



16



---

##### Table of Contents

Financial Information for Guarantors

Condensed Consolidated Balance Sheet

as of June 30, 2005



|                                                             |  |                             |         |   |                                     |   |         |              |  |   |                                              |   |  |   |         |  
|------------------------------------------------------------ |  | --------------------------- | ------- | - | ----------------------------------- | - | ------- | ------------ |  | - | -------------------------------------------- | - |  | - | ------- | -
|                                                             |  | Fisher Communications, Inc. |         |   | Wholly Owned Guarantor Subsidiaries |   |         | Eliminations |  |   | Fisher Communications, Inc. and Subsidiaries |  
|                                                             | 
|(in thousands)                                               |  |                             |         |   |                                     |   |         |              |  |   |                                              |   |  |   |         |  
|                                                             |  |                             |         |  
|ASSETS                                                       |  |                             |         |   |                                     |   |         |              |  |   |                                              |   |  |   |         |  
|Current Assets                                               |  |                             |         |   |                                     |   |         |              |  |   |                                              |   |  |   |         |  
|Cash and cash equivalents                                    |  | $                           | 801     |   |                                     | $ | 9,670   |              |  | $ |                                              |   |  | $ | 10,471  |  
|Receivables, net                                             |  |                             | 30      |   |                                     |   | 28,612  |              |  |   |                                              |   |  |   | 28,642  |  
|Due from affiliate                                           |  |                             | 1,928   |   |                                     |   |         |              |  |   | (1,928                                       | ) |  |   |        |  
|Income taxes receivable                                      |  |                             | 5,711   |   |                                     |   |         |              |  |   | (2,050                                       | ) |  |   | 3,661   |  
|Deferred income taxes                                        |  |                             | 101     |   |                                     |   | 1,057   |              |  |   |                                              |   |  |   | 1,158   |  
|Prepaid expenses                                             |  |                             | 360     |   |                                     |   | 3,894   |              |  |   |                                              |   |  |   | 4,254   |  
|Television and radio broadcast rights                        |  |                             |         |   |                                     |   | 3,204   |              |  |   |                                              |   |  |   | 3,204   |  
|                                                             | 
|Total current assets                                         |  |                             | 8,931   |   |                                     |   | 46,437  |              |  |   | (3,978                                       | ) |  |   | 51,390  |  
|Marketable securities, at market value                       |  |                             | 163,149 |   |                                     |   |         |              |  |   |                                              |   |  |   | 163,149 |  
|Investment in consolidated subsidiaries                      |  |                             | 219,082 |   |                                     |   |         |              |  |   | (219,082                                     | ) |  |   |        |  
|Cash value of life insurance and retirement deposits         |  |                             | 4,953   |   |                                     |   | 9,866   |              |  |   |                                              |   |  |   | 14,819  |  
|Television and radio broadcast rights                        |  |                             |         |   |                                     |   | 2,614   |              |  |   |                                              |   |  |   | 2,614   |  
|Goodwill, net                                                |  |                             |         |   |                                     |   | 38,354  |              |  |   |                                              |   |  |   | 38,354  |  
|Intangible assets                                            |  |                             |         |   |                                     |   | 1,244   |              |  |   |                                              |   |  |   | 1,244   |  
|Investments in equity investee                               |  |                             |         |   |                                     |   | 2,842   |              |  |   |                                              |   |  |   | 2,842   |  
|Deferred income taxes                                        |  |                             |         |   |                                     |   | 5,105   |              |  |   | (5,105                                       | ) |  |   |        |  
|Prepaid financing fees and other assets                      |  |                             | 5,611   |   |                                     |   | 947     |              |  |   |                                              |   |  |   | 6,558   |  
|Property, plant and equipment, net                           |  |                             | 932     |   |                                     |   | 145,503 |              |  |   |                                              |   |  |   | 146,435 |  
|                                                             | 
|Total Assets                                                 |  | $                           | 402,658 |   |                                     | $ | 252,912 |              |  | $ | (228,165                                     | ) |  | $ | 427,405 |  
|                                                             | 
|                                                             |  |                             |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY                         |  |                             |         |   |                                     |   |         |              |  |   |                                              |   |  |   |         |  
|Current Liabilities                                          |  |                             |         |   |                                     |   |         |              |  |   |                                              |   |  |   |         |  
|Notes payable                                                |  | $                           |         |   |                                     | $ |         |              |  | $ |                                              |   |  | $ |        |  
|Trade accounts payable                                       |  |                             | 206     |   |                                     |   | 2,574   |              |  |   |                                              |   |  |   | 2,780   |  
|Payable to affiliate                                         |  |                             |         |   |                                     |   | 1,928   |              |  |   | (1,928                                       | ) |  |   |        |  
|Accrued payroll and related benefits                         |  |                             | 747     |   |                                     |   | 4,373   |              |  |   |                                              |   |  |   | 5,120   |  
|Television and radio broadcast rights payable                |  |                             |         |   |                                     |   | 2,160   |              |  |   |                                              |   |  |   | 2,160   |  
|Income taxes payable                                         |  |                             |         |   |                                     |   | 2,050   |              |  |   | (2,050                                       | ) |  |   |        |  
|Other current liabilities                                    |  |                             | 5,539   |   |                                     |   | 2,027   |              |  |   |                                              |   |  |   | 7,566   |  
|                                                             | 
|Total current liabilities                                    |  |                             | 6,492   |   |                                     |   | 15,112  |              |  |   | (3,978                                       | ) |  |   | 17,626  |  
|Long-term debt                                               |  |                             | 150,000 |   |                                     |   |         |              |  |   |                                              |   |  |   | 150,000 |  
|Accrued retirement benefits                                  |  |                             | 2,196   |   |                                     |   | 17,559  |              |  |   |                                              |   |  |   | 19,755  |  
|Deferred income taxes                                        |  |                             | 40,145  |   |                                     |   |         |              |  |   | (5,105                                       | ) |  |   | 35,040  |  
|Other liabilities                                            |  |                             |         |   |                                     |   | 1,159   |              |  |   |                                              |   |  |   | 1,159   |  
|Stockholders Equity                                         |  |                             |         |   |                                     |   |         |              |  |   |                                              |   |  |   |         |  
|Common stock                                                 |  |                             | 10,869  |   |                                     |   | 1,131   |              |  |   | (1,131                                       | ) |  |   | 10,869  |  
|Capital in excess of par                                     |  |                             | 7,985   |   |                                     |   | 164,234 |              |  |   | (164,234                                     | ) |  |   | 7,985   |  
|Accumulated other comprehensive income, net of income taxes: |  |                             |         |   |                                     |   |         |              |  |   |                                              |   |  |   |         |  
|Unrealized gain on marketable securities                     |  |                             | 105,384 |   |                                     |   |         |              |  |   |                                              |   |  |   | 105,384 |  
|Minimum pension liability                                    |  |                             | (2,208  | ) |                                     |   | (2,208  | )            |  |   | 2,208                                        |   |  |   | (2,208  | )
|Retained earnings                                            |  |                             | 81,795  |   |                                     |   | 55,925  |              |  |   | (55,925                                      | ) |  |   | 81,795  |  
|                                                             | 
|Total Stockholders Equity                                   |  |                             | 203,825 |   |                                     |   | 219,082 |              |  |   | (219,082                                     | ) |  |   | 203,825 |  
|                                                             | 
|Total Liabilities and Stockholders Equity                   |  | $                           | 402,658 |   |                                     | $ | 252,912 |              |  | $ | (228,165                                     | ) |  | $ | 427,405 |  
|                                                             | 



17



---

##### Table of Contents

Financial Information for Guarantors

Condensed Consolidated Balance Sheet

as of December 31, 2004



|                                                             |  |                             |         |   |                                     |   |         |              |  |   |                                              |   |  |   |         |  
|------------------------------------------------------------ |  | --------------------------- | ------- | - | ----------------------------------- | - | ------- | ------------ |  | - | -------------------------------------------- | - |  | - | ------- | -
|                                                             |  | Fisher Communications, Inc. |         |   | Wholly Owned Guarantor Subsidiaries |   |         | Eliminations |  |   | Fisher Communications, Inc. and Subsidiaries |  
|                                                             | 
|(in thousands)                                               |  |                             |         |   |                                     |   |         |              |  |   |                                              |   |  |   |         |  
|                                                             |  |                             |         |  
|ASSETS                                                       |  |                             |         |   |                                     |   |         |              |  |   |                                              |   |  |   |         |  
|                                                             |  |                             |         |  
|Current Assets                                               |  |                             |         |   |                                     |   |         |              |  |   |                                              |   |  |   |         |  
|Cash and cash equivalents                                    |  | $                           | 1,007   |   |                                     | $ | 15,018  |              |  | $ |                                              |   |  | $ | 16,025  |  
|Receivables, net                                             |  |                             | 6       |   |                                     |   | 28,533  |              |  |   |                                              |   |  |   | 28,539  |  
|Due from affiliate                                           |  |                             | 10,379  |   |                                     |   |         |              |  |   | (10,379                                      | ) |  |   |        |  
|Income taxes receivable                                      |  |                             | 5,234   |   |                                     |   |         |              |  |   | (1,879                                       | ) |  |   | 3,355   |  
|Deferred income taxes                                        |  |                             | 92      |   |                                     |   | 539     |              |  |   |                                              |   |  |   | 631     |  
|Prepaid expenses                                             |  |                             | 222     |   |                                     |   | 3,431   |              |  |   |                                              |   |  |   | 3,653   |  
|Television and radio broadcast rights                        |  |                             |         |   |                                     |   | 8,398   |              |  |   |                                              |   |  |   | 8,398   |  
|                                                             | 
|Total current assets                                         |  |                             | 16,940  |   |                                     |   | 55,919  |              |  |   | (12,258                                      | ) |  |   | 60,601  |  
|Marketable securities, at market value                       |  |                             | 156,925 |   |                                     |   | 177     |              |  |   |                                              |   |  |   | 157,102 |  
|Investment in consolidated subsidiaries                      |  |                             | 218,380 |   |                                     |   |         |              |  |   | (218,380                                     | ) |  |   |        |  
|Cash value of life insurance and retirement deposits         |  |                             | 5,454   |   |                                     |   | 9,517   |              |  |   |                                              |   |  |   | 14,971  |  
|Television and radio broadcast rights                        |  |                             |         |   |                                     |   | 3,086   |              |  |   |                                              |   |  |   | 3,086   |  
|Goodwill, net                                                |  |                             |         |   |                                     |   | 38,354  |              |  |   |                                              |   |  |   | 38,354  |  
|Intangible assets                                            |  |                             |         |   |                                     |   | 1,244   |              |  |   |                                              |   |  |   | 1,244   |  
|Investments in equity investee                               |  |                             |         |   |                                     |   | 2,825   |              |  |   |                                              |   |  |   | 2,825   |  
|Deferred income taxes                                        |  |                             |         |   |                                     |   | 6,125   |              |  |   | (6,125                                       | ) |  |   |        |  
|Prepaid financing fees and and other assets                  |  |                             | 5,995   |   |                                     |   | 1,401   |              |  |   |                                              |   |  |   | 7,396   |  
|Property, plant and equipment, net                           |  |                             | 838     |   |                                     |   | 149,455 |              |  |   |                                              |   |  |   | 150,293 |  
|                                                             | 
|Total Assets                                                 |  | $                           | 404,532 |   |                                     | $ | 268,103 |              |  | $ | (236,763                                     | ) |  | $ | 435,872 |  
|                                                             | 
|                                                             |  |                             |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY                         |  |                             |         |   |                                     |   |         |              |  |   |                                              |   |  |   |         |  
|Current Liabilities                                          |  |                             |         |   |                                     |   |         |              |  |   |                                              |   |  |   |         |  
|Notes payable                                                |  | $                           | 44      |   |                                     | $ | 9       |              |  | $ |                                              |   |  | $ | 53      |  
|Trade accounts payable                                       |  |                             | 633     |   |                                     |   | 3,122   |              |  |   |                                              |   |  |   | 3,755   |  
|Payable to affiliate                                         |  |                             |         |   |                                     |   | 10,379  |              |  |   | (10,379                                      | ) |  |   |        |  
|Accrued payroll and related benefits                         |  |                             | 1,068   |   |                                     |   | 6,263   |              |  |   |                                              |   |  |   | 7,331   |  
|Television and radio broadcast rights payable                |  |                             |         |   |                                     |   | 7,419   |              |  |   |                                              |   |  |   | 7,419   |  
|Income taxes payable                                         |  |                             |         |   |                                     |   | 1,879   |              |  |   | (1,879                                       | ) |  |   |        |  
|Other current liabilities                                    |  |                             | 6,594   |   |                                     |   | 2,268   |              |  |   |                                              |   |  |   | 8,862   |  
|                                                             | 
|Total current liabilities                                    |  |                             | 8,339   |   |                                     |   | 31,339  |              |  |   | (12,258                                      | ) |  |   | 27,420  |  
|Long-term debt                                               |  |                             | 150,000 |   |                                     |   |         |              |  |   |                                              |   |  |   | 150,000 |  
|Accrued retirement benefits                                  |  |                             | 1,482   |   |                                     |   | 17,485  |              |  |   |                                              |   |  |   | 18,967  |  
|Deferred income taxes                                        |  |                             | 42,258  |   |                                     |   |         |              |  |   | (6,125                                       | ) |  |   | 36,133  |  
|Other liabilities                                            |  |                             |         |   |                                     |   | 899     |              |  |   |                                              |   |  |   | 899     |  
|Stockholders Equity                                         |  |                             |         |   |                                     |   |         |              |  |   |                                              |   |  |   |         |  
|Common stock                                                 |  |                             | 10,773  |   |                                     |   | 1,131   |              |  |   | (1,131                                       | ) |  |   | 10,773  |  
|Capital in excess of par                                     |  |                             | 4,535   |   |                                     |   | 164,234 |              |  |   | (164,234                                     | ) |  |   | 4,535   |  
|Accumulated other comprehensive income, net of income taxes: |  |                             |         |   |                                     |   |         |              |  |   |                                              |   |  |   |         |  
|Unrealized gain on marketable securities                     |  |                             | 101,400 |   |                                     |   | 75      |              |  |   | (75                                          | ) |  |   | 101,400 |  
|Minimum pension liability                                    |  |                             | (2,208  | ) |                                     |   | (2,208  | )            |  |   | 2,208                                        |   |  |   | (2,208  | )
|Retained earnings                                            |  |                             | 87,953  |   |                                     |   | 55,148  |              |  |   | (55,148                                      | ) |  |   | 87,953  |  
|                                                             | 
|Total Stockholders Equity                                   |  |                             | 202,453 |   |                                     |   | 218,380 |              |  |   | (218,380                                     | ) |  |   | 202,453 |  
|                                                             | 
|Total Liabilities and Stockholders Equity                   |  | $                           | 404,532 |   |                                     | $ | 268,103 |              |  | $ | (236,763                                     | ) |  | $ | 435,872 |  
|                                                             | 



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Financial Information for Guarantors

Condensed Consolidated Statement of Cash Flows

for the six months ended June
30, 2005



|                                                    |  |                             |        |   |                                     |   |        |              |  |                                              |   |  |   |        |  
|--------------------------------------------------- |  | --------------------------- | ------ | - | ----------------------------------- | - | ------ | ------------ |  | -------------------------------------------- | - |  | - | ------ | -
|                                                    |  | Fisher Communications, Inc. |        |   | Wholly Owned Guarantor Subsidiaries |   |        | Eliminations |  | Fisher Communications, Inc. and Subsidiaries |  
|                                                    | 
|(in thousands)                                      |  |                             |        |   |                                     |   |        |              |  |                                              |   |  |   |        |  
|                                                    |  |                             |        |  
|Net cash used in operating activities               |  | $                           | (2,988 | ) |                                     | $ | (3,371 | )            |  | $                                            |   |  | $ | (6,359 | )
|                                                    |  |                             |        |  
|Cash flows from investing activities                |  |                             |        |   |                                     |   |        |              |  |                                              |   |  |   |        |  
|Proceeds from collection of note receivable         |  |                             |        |   |                                     |   | 1,585  |              |  |                                              |   |  |   | 1,585  |  
|Proceeds from sale of marketable securities         |  |                             | 73     |   |                                     |   | 174    |              |  |                                              |   |  |   | 247    |  
|Purchase of property, plant and equipment           |  |                             | (228   | ) |                                     |   | (3,727 | )            |  |                                              |   |  |   | (3,955 | )
|                                                    | 
|Net cash used in investing activities               |  |                             | (155   | ) |                                     |   | (1,968 | )            |  |                                              |  |  |   | (2,123 | )
|                                                    | 
|                                                    |  |                             |        |  
|Cash flows from financing activities                |  |                             |        |   |                                     |   |        |              |  |                                              |   |  |   |        |  
|Payments under notes payable                        |  |                             | (44    | ) |                                     |   | (9     | )            |  |                                              |   |  |   | (53    | )
|Payment of deferred loan costs                      |  |                             | (87    | ) |                                     |   |        |              |  |                                              |   |  |   | (87    | )
|Proceeds from exercise of stock options             |  |                             | 3,068  |   |                                     |   |        |              |  |                                              |   |  |   | 3,068  |  
|                                                    | 
|Net cash provided by (used in) financing activities |  |                             | 2,937  |   |                                     |   | (9     | )            |  |                                              |  |  |   | 2,928  |  
|                                                    | 
|Net decrease in cash and cash equivalents           |  |                             | (206   | ) |                                     |   | (5,348 | )            |  |                                              |  |  |   | (5,554 | )
|Cash and cash equivalents, beginning of period      |  |                             | 1,007  |   |                                     |   | 15,018 |              |  |                                              |   |  |   | 16,025 |  
|                                                    | 
|Cash and cash equivalents, end of period            |  | $                           | 801    |   |                                     | $ | 9,670  |              |  | $                                            |  |  | $ | 10,471 |  
|                                                    | 



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Financial Information for Guarantors

Condensed Consolidated Statement of Cash Flows

for the six months ended June
30, 2004



|                                                     |  |                             |        |   |                                     |   |        |              |  |   |                                              |   |  |   |        |  
|---------------------------------------------------- |  | --------------------------- | ------ | - | ----------------------------------- | - | ------ | ------------ |  | - | -------------------------------------------- | - |  | - | ------ | -
|                                                     |  | Fisher Communications, Inc. |        |   | Wholly Owned Guarantor Subsidiaries |   |        | Eliminations |  |   | Fisher Communications, Inc. and Subsidiaries |  
|                                                     | 
|(in thousands)                                       |  |                             |        |   |                                     |   |        |              |  |   |                                              |   |  |   |        |  
|                                                     |  |                             |        |  
|Net cash provided by (used in) operating activities  |  | $                           | (5,439 | ) |                                     | $ | 2,359  |              |  | $ | (4,500                                       | ) |  | $ | (7,580 | )
|                                                     |  |                             |        |  
|Cash flows from investing activities                 |  |                             |        |   |                                     |   |        |              |  |   |                                              |   |  |   |        |  
|Purchase of property, plant and equipment            |  |                             | (133   | ) |                                     |   | (1,222 | )            |  |   |                                              |   |  |   | (1,355 | )
|                                                     | 
|Net cash used in investing activities                |  |                             | (133   | ) |                                     |   | (1,222 | )            |  |   |                                             |   |  |   | (1,355 | )
|                                                     | 
|                                                     |  |                             |        |  
|Cash flows from financing activities                 |  |                             |        |   |                                     |   |        |              |  |   |                                              |   |  |   |        |  
|Payments under notes payable                         |  |                             | (120   | ) |                                     |   |        |              |  |   |                                              |   |  |   | (120   | )
|Borrowings under borrowing agreements                |  |                             | 8,000  |   |                                     |   | 3,000  |              |  |   |                                              |   |  |   | 11,000 |  
|Payments on borrowing agreements                     |  |                             |        |   |                                     |   | (1,898 | )            |  |   |                                              |   |  |   | (1,898 | )
|Payments to terminate forward transaction tranche    |  |                             | (2,500 | ) |                                     |   |        |              |  |   |                                              |   |  |   | (2,500 | )
|Payment of deferred loan costs                       |  |                             | (134   | ) |                                     |   | (131   | )            |  |   |                                              |   |  |   | (265   | )
|Dividends Paid                                       |  |                             |        |   |                                     |   | (4,500 | )            |  |   | 4,500                                        |   |  |   |       |  
|Proceeds from exercise of stock options              |  |                             | 427    |   |                                     |   |        |              |  |   |                                              |   |  |   | 427    |  
|                                                     | 
|Net cash provide by (used in) financing activities   |  |                             | 5,673  |   |                                     |   | (3,529 | )            |  |   | 4,500                                        |   |  |   | 6,644  |  
|                                                     | 
|Net increase (decrease) in cash and cash equivalents |  |                             | 101    |   |                                     |   | (2,392 | )            |  |   |                                             |   |  |   | (2,291 | )
|Cash and cash equivalents, beginning of period       |  |                             | 1,639  |   |                                     |   | 11,357 |              |  |   |                                              |   |  |   | 12,996 |  
|                                                     | 
|Cash and cash equivalents, end of period             |  | $                           | 1,740  |   |                                     | $ | 8,965  |              |  | $ |                                             |   |  | $ | 10,705 |  
|                                                     | 



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ITEM 2 - MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS



The following discussion and analysis should be read in conjunction with the Financial Statements and related Notes thereto included elsewhere in this quarterly report
on Form 10-Q. Some of the statements in this quarterly report are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all passages containing verbs such as `aims,
anticipates, believes, estimates, expects, hopes, intends, plans, predicts, projects or targets' or nouns corresponding to such verbs. Forward-looking statements also include any other passages that are primarily relevant to expected future events
or that can only be fully evaluated by events that will occur in the future. There are many risks and uncertainties that could cause actual results to differ materially from those predicted in our forward-looking statements, including, without
limitation, those factors discussed under the caption Additional Factors That May Affect Our Business, Financial Condition And Future Results. Readers are cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date of this report. We undertake no obligation to revise any forward-looking statements in order to reflect events or circumstances that may subsequently arise. Readers are urged to carefully review and consider the various
disclosures made in this report and in our other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect our business, prospects and results of operations. As used
herein, unless the context requires otherwise, when we say we, us, our, or the Company, we are referring to Fisher Communications, Inc. and its consolidated subsidiaries.



This discussion is intended to provide an analysis of significant trends, if any, and
material changes in our financial position and operating results of our business units during the three- and six-month periods ended June 30, 2005, compared with the corresponding periods in 2004.



We are an integrated media company. We own and operate nine network-affiliated television
stations and 27 radio stations. We also own a 50% interest in a company that owns a tenth television station. Our television and radio stations are located in Washington, Oregon, Idaho and Montana. We also own and operate Fisher Plaza, a
communications facility located near downtown Seattle that serves as the home for our corporate offices and our Seattle television and radio stations, and also houses a variety of companies, including media and communications companies. We also own
approximately 3.0 million shares of common stock of Safeco Corporation, a publicly traded insurance company.



Our broadcasting operations receive revenues from the sale of local, regional and national advertising and, to a much lesser extent, from network compensation, satellite and fiber transmission services, tower rental
and commercial production activities. Our operating results are therefore sensitive to broad economic trends that affect the broadcasting industry in general, as well as local and regional trends, such as those in the Northwest economy. The
advertising revenue of our stations is generally highest in the second and fourth quarters of each year, due in part to increases in consumer advertising in the spring and retail advertising in the period leading up to and including the holiday
season. In addition, advertising revenue is generally higher during national election years due to spending by political candidates and advocacy groups. This political spending typically is heaviest during the fourth quarter.



Our television revenues are significantly affected by network affiliation and the success of
programming offered by those networks. Our two largest television stations, representing approximately three-fourths of our television revenues, are affiliated with ABC, and the remaining eight television stations (including 50%-owned KPIC TV) are
affiliated with CBS. Our broadcasting operations are subject to competitive pressures from traditional broadcasting sources, as well as from alternative methods of delivering information and entertainment, and these pressures may cause fluctuations
in operating results.



In May 2002, we entered into a radio rights agreement
(the Rights Agreement) to broadcast Seattle Mariners baseball games on KOMO AM for the 2003 through 2008 baseball seasons. The impact of the Rights Agreement is greater during periods that include the broadcast of Mariners baseball
games; therefore, the impact on the first and fourth quarters of each year is less than what is expected for the second and third quarters of the calendar year. We also changed to an all-news format for KOMO AM in September 2002. These changes have
led to improved ratings



21



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##### Table of Contents

for KOMO AM in the Seattle market over the past few years, and we expect that these investments will lead to improved operating performance for our Seattle
radio stations. Nevertheless, the success of this programming is dependent, in part, on factors beyond our control, such as the competitiveness of the Seattle Mariners and the successful marketing of the team.



In addition to our broadcasting operations, we own and operate Fisher Plaza, and we lease
space to other companies that are attracted by the property location and the infrastructure provided at this facility. Fisher Plaza was first opened for occupancy in May 2000, and the second phase of the project was opened for occupancy in the
summer of 2003. As of June 30, 2005, approximately 88% of Fisher Plaza was occupied or committed for occupancy (42% was occupied by Fisher entities), compared to 89% occupied or committed for occupancy at December 31, 2004. Revenue and operating
income from Fisher Plaza are dependent upon the general economic climate, the Seattle economic climate, the outlook of the telecommunications and technology sectors and real estate conditions, including the availability of space in other competing
properties.



On September 20, 2004 we completed an offering of $150.0 million
of 8.625% senior notes due 2014 and used the net cash proceeds to retire our previous debt facilities and terminate the forward sales contract covering shares of our investment in Safeco Corporation. The notes are unconditionally guaranteed, jointly
and severally, on an unsecured, senior basis by the current and future material domestic subsidiaries of the Company. Interest on the notes is payable semiannually in arrears on March 15 and September 15 of each year.



Management focuses on key metrics from operational data within our broadcasting and Fisher
Plaza operations. Information on significant trends is provided in the section entitled Consolidated Results of Operations.



CRITICAL ACCOUNTING POLICIES



The SEC has defined a companys critical accounting policies as the ones that are most important to the portrayal of the companys financial condition and
results of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Our critical accounting policies and estimates
include the estimates used in determining the recoverability of goodwill and other indefinite-lived intangible assets, the value of derivative instruments formerly held by the Company, the value of television and radio broadcast rights, the cost of
pension programs, the amount of tax accruals and the amount of the allowance for doubtful accounts. For a detailed discussion of our critical accounting policies and estimates, please refer to our Annual Report on Form 10-K for the year ended
December 31, 2004. There have been no material changes in the application of our critical accounting policies and estimates subsequent to that report. We have discussed the development and selection of these critical accounting estimates with the
Audit Committee of our board of directors.



The preparation of financial
statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.



CONSOLIDATED RESULTS OF OPERATIONS



We report financial data for three reportable segments: television, radio and Fisher Plaza. The television reportable segment includes the operations of our nine
networkaffiliated wholly owned television stations, and a tenth television station 50% owned by us. The radio reportable segment includes the operations of our 27 radio stations. Corporate expenses of the broadcasting business unit are
allocated to the television and radio reportable segments based on a ratio that approximates historic revenue and operating expenses of the segments. The Fisher Plaza reportable segment consists of the operations of Fisher Plaza.



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##### Table of Contents

Percentage comparisons have been omitted within the following table where they are not considered meaningful.



|                                                       |  |                         |         |   |          |   |         |                           |  |   |          |   |  |       |   |  |      |        |   |   |   |        |   |  |   |        |   |  |       |  
|------------------------------------------------------ |  | ----------------------- | ------- | - | -------- | - | ------- | ------------------------- |  | - | -------- | - |  | ----- | - |  | ---- | ------ | - | - | - | ------ | - |  | - | ------ | - |  | ----- | -
|                                                       |  | Six monthsended June 30 |         |   | Variance |   |         | Three monthsended June 30 |  |   | Variance |  
|                                                       |  |                         |         |   |          |   |         |                           |  |   |          |  
|                                                       |  | 2005                    |         |   | 2004     |   |         | $                         |  |   | %        |   |  | 2005  |   |  | 2004 |        |   | $ |   |        | % | 
|                                                       |  |                         |         |   |          |   |         |                           |  |   |          |   |  |       |   |  |      |        |   |  
|(dollars in thousands)                                 |  |                         |         |   |          |   |         |                           |  |   |          |   |  |       |   |  |      |        |   |   |   |        |   |  |   |        |   |  |       |  
|                                                       |  |                         |         |   |          |   |         |                          
|(Unaudited)                                            |  |                         |         |   |          |   |         |                           |  |   |          |   |  |       |   |  |      |        |   |   |   |        |   |  |   |        |   |  |       |  
|                                                       |  |                         |         |   |          |   |         |                          
|Revenue                                                |  |                         |         |   |          |   |         |                           |  |   |          |   |  |       |   |  |      |        |   |   |   |        |   |  |   |        |   |  |       |  
|Television                                             |  | $                       | 44,196  |   |          | $ | 46,106  |                           |  | $ | (1,910   | ) |  | -4.1  | % |  | $    | 23,370 |   |   | $ | 24,372 |   |  | $ | (1,002 | ) |  | -4.1  | %
|Radio                                                  |  |                         | 22,992  |   |          |   | 23,225  |                           |  |   | (233     | ) |  | -1.0  | % |  |      | 14,727 |   |   |   | 15,156 |   |  |   | (429   | ) |  | -2.8  | %
|Fisher Plaza                                           |  |                         | 3,996   |   |          |   | 1,977   |                           |  |   | 2,019    |   |  | 102.1 | % |  |      | 2,078  |   |   |   | 880    |   |  |   | 1,198  |   |  | 136.1 | %
|Corporate and eliminations                             |  |                         | (105    | ) |          |   | (42     | )                         |  |   | (63      | ) |  |       |   |  |      | (53    | ) |   |   | (34    | ) |  |   | (19    | ) |  |       |  
|                                                       |  |                         |         |   |          |   |         |                           |  |   |          |   |  |       |   |  |      |        |   |   |   |       
|Consolidated                                           |  |                         | 71,079  |   |          |   | 71,266  |                           |  |   | (187     | ) |  | -0.3  | % |  |      | 40,122 |   |   |   | 40,374 |   |  |   | (252   | ) |  | -0.6  | %
|                                                       |  |                         |         |   |          |   |         |                          
|Cost of services sold                                  |  |                         |         |   |          |   |         |                           |  |   |          |   |  |       |   |  |      |        |   |   |   |        |   |  |   |        |   |  |       |  
|Television                                             |  |                         | 23,407  |   |          |   | 21,120  |                           |  |   | 2,287    |   |  | 10.8  | % |  |      | 11,537 |   |   |   | 10,267 |   |  |   | 1,270  |   |  | 12.4  | %
|Radio                                                  |  |                         | 11,767  |   |          |   | 10,821  |                           |  |   | 946      |   |  | 8.7   | % |  |      | 8,033  |   |   |   | 7,417  |   |  |   | 616    |   |  | 8.3   | %
|Fisher Plaza                                           |  |                         | 1,288   |   |          |   | 804     |                           |  |   | 484      |   |  | 60.2  | % |  |      | 666    |   |   |   | 438    |   |  |   | 228    |   |  | 52.1  | %
|Corporate and eliminations                             |  |                         | 780     |   |          |   | 834     |                           |  |   | (54      | ) |  |       |   |  |      | 383    |   |   |   | 398    |   |  |   | (15    | ) |  |       |  
|                                                       |  |                         |         |   |          |   |         |                           |  |   |          |   |  |       |   |  |      |        |   |   |   |        |   |  |   |        |   |  |       |  
|Consolidated                                           |  |                         | 37,242  |   |          |   | 33,579  |                           |  |   | 3,663    |   |  | 10.9  | % |  |      | 20,619 |   |   |   | 18,520 |   |  |   | 2,099  |   |  | 11.3  | %
|                                                       |  |                         |         |   |          |   |         |                          
|Selling expenses                                       |  |                         |         |   |          |   |         |                           |  |   |          |   |  |       |   |  |      |        |   |   |   |        |   |  |   |        |   |  |       |  
|Television                                             |  |                         | 5,933   |   |          |   | 5,749   |                           |  |   | 184      |   |  | 3.2   | % |  |      | 3,235  |   |   |   | 2,861  |   |  |   | 374    |   |  | 13.1  | %
|Radio                                                  |  |                         | 7,183   |   |          |   | 7,251   |                           |  |   | (68      | ) |  | -0.9  | % |  |      | 4,094  |   |   |   | 3,992  |   |  |   | 102    |   |  | 2.6   | %
|Fisher Plaza                                           |  |                         | 213     |   |          |   | 514     |                           |  |   | (301     | ) |  | -58.6 | % |  |      | 122    |   |   |   | 298    |   |  |   | (176   | ) |  | -59.1 | %
|                                                       |  |                         |         |   |          |   |         |                           |  |   |          |   |  |       |   |  |      |        |   |   |   |        |   |  |   |        |   |  |       |  
|Consolidated                                           |  |                         | 13,329  |   |          |   | 13,514  |                           |  |   | (185     | ) |  | -1.4  | % |  |      | 7,451  |   |   |   | 7,151  |   |  |   | 300    |   |  | 4.2   | %
|                                                       |  |                         |         |   |          |   |         |                          
|General and administrative expenses                    |  |                         |         |   |          |   |         |                           |  |   |          |   |  |       |   |  |      |        |   |   |   |        |   |  |   |        |   |  |       |  
|Television                                             |  |                         | 8,637   |   |          |   | 8,894   |                           |  |   | (257     | ) |  | -2.9  | % |  |      | 3,946  |   |   |   | 4,194  |   |  |   | (248   | ) |  | -5.9  | %
|Radio                                                  |  |                         | 3,848   |   |          |   | 3,999   |                           |  |   | (151     | ) |  | -3.8  | % |  |      | 1,812  |   |   |   | 1,950  |   |  |   | (138   | ) |  | -7.1  | %
|Fisher Plaza                                           |  |                         | 395     |   |          |   | 532     |                           |  |   | (137     | ) |  | -25.8 | % |  |      | 126    |   |   |   | 232    |   |  |   | (106   | ) |  | -45.7 | %
|Corporate and eliminations                             |  |                         | 4,915   |   |          |   | 4,551   |                           |  |   | 364      |   |  | 8.0   | % |  |      | 2,036  |   |   |   | 2,421  |   |  |   | (385   | ) |  | -15.9 | %
|                                                       |  |                         |         |   |          |   |         |                           |  |   |          |   |  |       |   |  |      |        |   |   |   |        |   |  |   |        |   |  |       |  
|Consolidated                                           |  |                         | 17,795  |   |          |   | 17,976  |                           |  |   | (181     | ) |  | -1.0  | % |  |      | 7,920  |   |   |   | 8,797  |   |  |   | (877   | ) |  | -10.0 | %
|                                                       |  |                         |         |   |          |   |         |                          
|Depreciation and amortization                          |  |                         |         |   |          |   |         |                           |  |   |          |   |  |       |   |  |      |        |   |   |   |        |   |  |   |        |   |  |       |  
|Television                                             |  |                         | 4,908   |   |          |   | 5,556   |                           |  |   | (648     | ) |  | -11.7 | % |  |      | 2,230  |   |   |   | 2,704  |   |  |   | (474   | ) |  | -17.5 | %
|Radio                                                  |  |                         | 727     |   |          |   | 768     |                           |  |   | (41      | ) |  | -5.3  | % |  |      | 360    |   |   |   | 364    |   |  |   | (4     | ) |  | -1.1  | %
|Fisher Plaza                                           |  |                         | 1,981   |   |          |   | 1,906   |                           |  |   | 75       |   |  | 3.9   | % |  |      | 967    |   |   |   | 1,003  |   |  |   | (36    | ) |  | -3.6  | %
|Corporate and eliminations                             |  |                         | 135     |   |          |   | 85      |                           |  |   | 50       |   |  | 58.8  | % |  |      | 65     |   |   |   | 33     |   |  |   | 32     |   |  | 97.0  | %
|                                                       |  |                         |         |   |          |   |         |                           |  |   |          |   |  |       |   |  |      |        |   |   |   |        |   |  |   |        |   |  |       |  
|Consolidated                                           |  |                         | 7,751   |   |          |   | 8,315   |                           |  |   | (564     | ) |  | -6.8  | % |  |      | 3,622  |   |   |   | 4,104  |   |  |   | (482   | ) |  | -11.7 | %
|                                                       |  |                         |         |   |          |   |         |                          
|Income (loss) from operations                          |  |                         |         |   |          |   |         |                           |  |   |          |   |  |       |   |  |      |        |   |   |   |        |   |  |   |        |   |  |       |  
|Television                                             |  | $                       | 1,311   |   |          | $ | 4,787   |                           |  |   | (3,476   | ) |  |       |   |  | $    | 2,422  |   |   | $ | 4,346  |   |  |   | (1,924 | ) |  |       |  
|Radio                                                  |  |                         | (533    | ) |          |   | 386     |                           |  |   | (919     | ) |  |       |   |  |      | 428    |   |   |   | 1,433  |   |  |   | (1,005 | ) |  |       |  
|Fisher Plaza                                           |  |                         | 119     |   |          |   | (1,779  | )                         |  |   | 1,898    |   |  |       |   |  |      | 197    |   |   |   | (1,091 | ) |  |   | 1,288  |   |  |       |  
|Corporate and eliminations                             |  |                         | (5,935  | ) |          |   | (5,512  | )                         |  |   | (423     | ) |  |       |   |  |      | (2,537 | ) |   |   | (2,886 | ) |  |   | 349    |   |  |       |  
|                                                       |  |                         |         |   |          |   |         |                           |  |   |          |   |  |       |   |  |      |        |   |   |   |        |   |  |   |        |   |  |       |  
|Consolidated                                           |  |                         | (5,038  | ) |          |   | (2,118  | )                         |  |   | (2,920   | ) |  |       |   |  |      | 510    |   |   |   | 1,802  |   |  |   | (1,292 | ) |  |       |  
|Net loss on derivative instruments                     |  |                         |         |   |          |   | (10,545 | )                         |  |   | 10,545   |   |  |       |   |  |      |        |   |   |   | (1,373 | ) |  |   | 1,373  |   |  |       |  
|Other income, net                                      |  |                         | 1,781   |   |          |   | 1,467   |                           |  |   | 314      |   |  |       |   |  |      | 931    |   |   |   | 664    |   |  |   | 267    |   |  |       |  
|Interest expense, net                                  |  |                         | (6,775  | ) |          |   | (5,767  | )                         |  |   | (1,008   | ) |  |       |   |  |      | (3,404 | ) |   |   | (2,643 | ) |  |   | (761   | ) |  |       |  
|                                                       |  |                         |         |   |          |   |         |                           |  |   |          |   |  |       |   |  |      |        |   |   |   |        |   |  |   |        |   |  |       |  
|Loss from continuing operations before income taxes    |  |                         | (10,032 | ) |          |   | (16,963 | )                         |  |   | 6,931    |   |  |       |   |  |      | (1,963 | ) |   |   | (1,550 | ) |  |   | (413   | ) |  |       |  
|Benefit for federal and state income taxes             |  |                         | (3,874  | ) |          |   | (5,806  | )                         |  |   | 1,932    |   |  |       |   |  |      | (873   | ) |   |   | (106   | ) |  |   | (767   | ) |  |       |  
|                                                       |  |                         |         |   |          |   |         |                           |  |   |          |   |  |       |   |  |      |        |   |   |   |        |   |  |   |        |   |  |       |  
|Loss from continuing operations                        |  |                         | (6,158  | ) |          |   | (11,157 | )                         |  |   | 4,999    |   |  |       |   |  |      | (1,090 | ) |   |   | (1,444 | ) |  |   | 354    |   |  |       |  
|Loss from discontinued operations, net of income taxes |  |                         |         |   |          |   | (132    | )                         |  |   | 132      |   |  |       |   |  |      |        |   |   |   |        |   |  |   |       |   |  |       |  
|                                                       |  |                         |         |   |          |   |         |                           |  |   |          |   |  |       |   |  |      |        |   |   |   |        |   |  |   |        |   |  |       |  
|Net loss                                               |  | $                       | (6,158  | ) |          | $ | (11,289 | )                         |  | $ | 5,131    |   |  |       |   |  | $    | (1,090 | ) |   | $ | (1,444 | ) |  | $ | 354    |   |  |       |  
|                                                       |  |                         |         |   |          |   |         |                           |  |   |          |   |  |       |   |  |      |        |   |   |   |        |   |  |   |        |   |  |       |  



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Comparison of Fiscal Six and Three-Month Periods Ended June 30, 2005, and June 30, 2004



Revenue



Television revenue decreased in the three and six-month periods ended June 30, 2005, as compared to the same periods in 2004, primarily due
to lower political advertising in 2005, partially offset by improved local advertising in most of our markets. The prior year was a national election year, and political campaigns began spending on broadcast advertising in certain of our markets
toward the end of the first quarter of 2004. We also had lower network compensation revenue in the first six months of 2005, as compared to the same period of 2004. In May 2005, we signed agreements with ABC to renew that networks affiliation
at KOMO TV and KATU through 2009. The terms of the renewal include decreasing network compensation, and we are recognizing network compensation revenue on a straight-line basis over the term of the agreement. KOMO TV in Seattle and KATU in Portland
are our two largest stations, and we have noted improved ABC network program ratings since the fall of 2004. Because our two ABC-affiliated stations account for approximately three-fourths of our television revenues, strengthened network programming
and the corresponding improved lead-ins to local news programs could help us generate increased future revenue.



Based on information published by Miller, Kaplan, Arase & Co., LLP (Miller Kaplan), total spot revenue for the overall Seattle television market decreased 6.9% in the
first six months of 2005, as compared to the same six months in 2004, and total spot revenue for the overall Portland television market decreased 8.2% over these same periods. Our Seattle and Portland television stations experienced spot revenue
decreases of 0.3% and 8.9%, respectively, in the first six months of 2005, as compared to the same period of 2004. Total revenues for our Seattle and Portland television stations decreased 2.9% and 9.7%, respectively, in the first six months of
2005, as compared to the first six months of 2004. Revenue from our remaining television stations decreased by 1.5% in the first half of 2005, as compared to the first half of 2004. As previously noted, the decreases were due to lower political
advertising.



Our radio operations showed slightly decreased revenue in the
first six months of 2005, compared to the first six months of 2004, as a result of decreased national revenue which was partially offset by increased local spot revenue in our smaller-market stations, as well as KOMO AMs increased performance
in the Seattle market. Excluding revenues specifically attributable to Seattle Radios agreement with the Seattle Mariners to broadcast baseball games, KOMO AMs revenues increased 14.8% in the first half of 2005, compared to the first
half of 2004. We attribute the increase primarily to the synergistic effect of the Seattle Mariners programming and KOMO AMs all-news format gaining greater recognition in the Seattle market. Miller Kaplan data, which excludes sports
programming, reported that radio revenues for the Seattle market grew 3.9% during the first half of 2005, as compared to the first half of 2004. Total Seattle Radio revenue decreased 3.0% and 0.8% in the three and six-month periods ended June 30,
2005, as compared to the same periods of 2004, primarily due to decreased national advertising. Revenue from our Seattle Radio operations comprised approximately three-fourths of our total radio revenue in the six months ended June 30, 2005.



Fisher Plaza first opened in May of 2000, and the second phase of the project
was open for occupancy in the summer of 2003. The increase in revenue in the six and three-month periods ended June 30, 2005, as compared to the same periods of 2004, was due primarily to increased occupancy levels to 88% as of June 30, 2005 from
70% as of January 1, 2004.



Cost of services sold



The cost of services sold consists primarily of costs to acquire, produce, and promote
broadcast programming for the television and radio segments, and costs to operate Fisher Plaza. Many of these costs are relatively fixed in nature and do not necessarily vary on a proportional basis with revenue. The increase in the television
segment cost of services sold in three and six-month periods ended June 30, 2005, as compared to the same periods in 2004, is primarily the result of higher syndication costs, as well as certain increased talent and labor costs.



Higher cost of services sold at our radio segment in the first half of 2005, as compared to
the comparable period in 2004, was primarily attributable to increased talent and labor expenses. The radio segment had increased cost of services sold in the three months ended June 30, 2005, as compared to the comparable period in 2004, primarily



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attributable to increased talent and labor expenses and somewhat increased expenses related to the Seattle Mariners broadcast rights.



The increase in cost of services sold at Fisher Plaza in the three and six-months ended June
30, 2005, as compared to the same 2004 periods, was primarily attributable to higher third-party tenant occupancy, for which expense reimbursements are classified as revenue under applicable accounting rules.



The corporate and eliminations category consists primarily of the reclassification and
elimination of certain operating expenses between operating segments. For example, KOMO TV and Seattle Radio recognize facilities-related expenses as general and administrative, while Fisher Plaza records the reimbursement of these intercompany
expenses as a reduction of cost of services sold.



Selling expenses



The increases in selling expenses in the television segment in the three
and six-month periods ended June 30, 2005, as compared to the same periods in 2004, were due primarily to increased labor and promotional expense, which offset decreases that would be expected at somewhat lower revenue levels.



Decreased selling expenses at Fisher Plaza for the three and six-month periods ended June 30,
2005, as compared to the same periods in 2004, were due primarily to greater required marketing efforts in 2004, including marketing the second phase of the facility which was first available for occupancy in the summer of 2003. As of December 31,
2004, approximately 89% of Fisher Plaza was occupied or committed for occupancy (88% at June 30, 2005) and, consequently, broad-based selling initiatives have been reduced.



General and administrative expenses



The television and radio segments had lower general and administrative costs during the three and six-month periods ended June 30, 2005, as compared to the corresponding
2004 periods, due primarily to certain employee termination expenses incurred in 2004 and lower property tax expenses.



The corporate group incurred higher expenses in the first half of 2005, as compared to the first half of 2004, primarily as a result of severance expenses totaling
approximately $1.0 million for the Companys former chief executive officer, a pension curtailment loss of $451,000 recognized in the second quarter of 2005, as well as higher audit and accounting expenses related to completion of documentation
and testing procedures pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, partially offset by reductions in other expenses. Corporate expenses decreased in the three months ended June 30, 2005, as compared to the three months ended June 30,
2004, as a result of severance expenses totaling $471,000 incurred in the 2004 period for the retirement of the Companys former chief financial officer.



Depreciation



Depreciation for the television segment declined in the three and six-month periods ended June 30, 2005, as compared to the same periods in 2004, as a result of certain assets having become fully depreciated.



Net loss on derivative instruments



We had no remaining derivative instruments as of June 30, 2005; however, derivative
instruments had a significant impact on our operating results over the past few years. On March 21, 2002, we entered into a variable forward sales transaction (the Forward Transaction) with a financial institution. Our obligations under
the Forward Transaction were collateralized by 3.0 million shares of Safeco Corporation common stock owned by the Company. A portion of the Forward Transaction was considered a derivative and, as such, we periodically measured its fair value and
recognized the derivative as an asset or a liability. The change in the fair value of the derivative was recorded in the statement of operations. Changes in the value of the Forward Transaction were based primarily on changes in the



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value of Safeco Corporation common stock, changes in underlying assumptions concerning the volatility of Safeco common stock, and changes in interest rates.



On April 28, 2004, we terminated one tranche of the Forward Transaction with a
maturity date of March 15, 2007. In connection with the termination, the Company paid a termination fee of $2.5 million which consisted of losses recorded in previous periods of $2.1 million and an additional loss of $436,000 recorded in the quarter
ended June 30, 2004.



On November 4, 2004, we terminated all remaining tranches
of the Forward Transaction. In connection with the termination, we paid a termination fee of $16.1 million. As a result of the termination, all shares of Safeco Corporation common stock owned by us became unencumbered.



In connection with borrowings for our broadcasting operations, the broadcasting subsidiary
entered into an interest rate swap agreement (the Swap Agreement) fixing the interest rate at 6.87%, plus a margin based on the broadcasting subsidiarys ratio of consolidated funded debt to consolidated EBITDA, on a portion of the
floating rate debt outstanding under these borrowings. The change in value of the Swap Agreement was recorded in the statement of operations. The interest rate swap expired in March 2004.



Net loss on derivative instruments in the six-month period ended June 30, 2004 consisted of losses resulting from changes in fair value of
the Forward Transaction derivative amounting to $11.4 million, offset in part by a gain from changes in fair value of the Swap Agreement amounting to $907,000. The loss on the Forward Transaction was primarily attributable to the increased value of
Safeco Corporation common stock during the six-month period ended June 30, 2004. The Company recorded a $15.2 million pre-tax increase in value of its marketable securities during the six-month period ended June 30, 2004, and that increase is
reflected, after tax effects, in the Condensed Consolidated Statement of Comprehensive Income.



Other income, net



Other income, net,
includes primarily dividends received on marketable securities and, to a lesser extent, interest and miscellaneous income. The increase in the three and six-month periods ended June 30, 2005, in comparison to the same periods in 2004, was due to
increased dividends received and gains on the sales of certain marketable securities in 2005.



Interest expense



Interest expense
includes interest on borrowed funds, amortization of loan fees, and net payments under the prior-year Swap Agreement. The increase in interest expense in the three and six-month periods ended June 30, 2005, compared to the same periods in 2004, is
due primarily to higher debt balances outstanding in the 2005 periods.



Benefit for federal and state income taxes



The benefit for
federal and state income taxes varies directly with pre-tax loss. Consequently, the changes in benefit for federal and state income taxes were primarily due to fluctuating losses from continuing operations before income taxes. The effective tax rate
generally varies from the statutory rate primarily due to a deduction for dividends received from our investment in Safeco corporate common stock, changes in cash surrender value of life insurance policies held by the Company (for which proceeds are
received tax-free if held to maturity), and the impact of state income taxes. Due to the uncertainty of the Companys ability to generate sufficient state taxable income to realize its deferred state tax assets, a valuation allowance has been
established for financial reporting purposes.



Liquidity and capital
resources



In September 2004, we completed a $150.0 million offering of
8.625% senior notes due 2014 and used $143.9 million of the initial $144.5 million net proceeds to retire existing debt and to settle the outstanding obligations under the Forward Transaction. The notes are unconditionally guaranteed, jointly and
severally, on an unsecured, senior basis by our current and future material domestic subsidiaries. Interest on the notes is payable semiannually in arrears on March 15 and September 15 of each year. In September 2004, we also entered into a new
six-year senior credit facility with a financial institution for borrowings of up to $20.0 million. The credit facility is collateralized



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by substantially all of the Companys assets (excluding certain real property and our investment in shares of Safeco Corporation common stock). In
November 2004, we terminated all remaining tranches of the Forward Transaction and paid a termination fee of $16.1 million. As a result of the termination, all shares of Safeco Corporation common stock owned by us are now unencumbered.



Our current assets as of June 30, 2005 included cash and cash equivalents totalling $10.5
million, and we had working capital of $33.8 million. As of December 31, 2004, our current assets included cash and cash equivalents totalling $16.0 million, and we had working capital of $33.2 million. We intend to finance working capital, debt
service, capital expenditures, and dividend requirements, if any, primarily through operating activities. However, we may use the credit facility to meet operating needs. As of June 30, 2005, the entire $20.0 million was available under the credit
facility. We believe that existing cash and cash equivalents, combined with access to our credit facility, are adequate to fund our operations.



Net cash used by operating activities during the six months ended June 30, 2005 was $6.4 million, compared to cash used by operations of $7.6 million in the six months
ended June 30, 2004. Net cash used by operating activities consists of our net loss, adjusted by non-cash expenses such as depreciation and amortization and net loss on derivative instruments (for the 2004 period), adjusted by changes in deferred
income tax and changes in operating assets and liabilities. In the first six months of 2004, we made significant tax payments relating to our gains on sale transactions in 2003; these payments represented a significant portion of the cash used in
operating activities during the six-month period ended June 30, 2004. Net cash used in investing activities during the period ended June 30, 2005, included $4.0 million used to purchase property, plant and equipment, partially offset by the
collection of two notes receivable totaling $1.6 million related to prior year asset sales, compared to $1.4 million used to purchase property, plant and equipment in the six-month period ended June 30, 2004. Broadcasting is a capital-intensive
business; however, we have no significant commitments for the purchase of capital items.



Net cash provided by financing activities in the six months ended June 30, 2005 was $2.9 million, comprised primarily of $3.1 million in proceeds from the exercise of stock options. These cash activities were
partially offset by payments of notes payable and deferred loan costs. Net cash provided by financing activities in the six months ended June 30, 2004 was $6.6 million, comprised primarily of $9.1 million in net borrowings under our credit
facilities, reduced by a $2.5 million payment to terminate a forward transaction tranche.



We are subject to various debt covenants and other restrictions  including the requirement for early payments upon the occurrence of certain events, including the sale of assets  the violation of which
could require repayment of outstanding borrowings and affect our credit rating and access to other financing (see Note 4 of the Condensed Consolidated Financial Statements). The Company was in compliance with all debt covenant requirements at June
30, 2005.



As of June 30, 2005, the following table presents our contractual
obligations (in thousands):



Future contractual obligations are as follows
(in thousands):



|                    |  |                |         |                 |   |                  |  |                           |        |       |   |       |  |   |        
|------------------- |  | -------------- | ------- | --------------- | - | ---------------- |  | ------------------------- | ------ | ----- | - | ----- |  | - | -------
|As of June 30, 2005 |  | DebtMaturities |         | BroadcastRights |   | OtherObligations |  | OperatingLeaseObligations |        | Total
|                    |  |                |         |                 |   |                  |  |                           |        |       |   |       |  |   |        
|2005                |  |                |         |                 | $ | 17,816           |  | $                         | 4,295  |       | $ | 1,014 |  | $ | 23,125 
|2006                |  |                |         |                 |   | 17,230           |  |                           | 5,143  |       |   | 801   |  |   | 23,174 
|2007                |  |                |         |                 |   | 14,721           |  |                           | 3,853  |       |   | 643   |  |   | 19,217 
|2008                |  |                |         |                 |   | 6,722            |  |                           | 1,151  |       |   | 506   |  |   | 8,379  
|2009                |  |                |         |                 |   | 1,348            |  |                           |        |       |   | 399   |  |   | 1,747  
|Thereafter          |  |                | 150,000 |                 |   | 668              |  |                           |        |       |   | 2,416 |  |   | 153,084
|                    |  |                |         |                 |   |                  |  |                           |        |       |   |       |  |   |        
|                    |  | $              | 150,000 |                 | $ | 58,505           |  | $                         | 14,442 |       | $ | 5,779 |  | $ | 228,726
|                    |  |                |         |                 |   |                  |  |                           |        |       |   |       |  |   |        



Commitments for broadcast rights
consist of $2.2 million recorded in the Consolidated Balance Sheet as television and radio broadcast rights payable as of June 30, 2005 and $56.3 million for future rights to broadcast television and radio programs. Other obligations consist of $7.3
million in fees relating to future rights to broadcast television and radio programs and $7.2 million for commitments under a joint sales agreement.



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ADDITIONAL FACTORS THAT MAY AFFECT OUR BUSINESS, FINANCIAL CONDITION AND FUTURE RESULTS



The following risk factors and other information included in this quarterly report should
be carefully considered. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. If any of
the following risks occur, our business, financial condition and future results could be materially adversely affected.



We depend on advertising revenues, which fluctuate as a result of a number of factors.



Our main source of revenue is sales of advertising. Our ability to sell advertising depends on:



| |  |  | the health of the national economy, and particularly the economy of the Northwest region and Seattle, Washington and Portland, Oregon;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the popularity of our programming;
| | - |  | ----------------------------------



| |  |  | changes in the makeup of the population in the areas where our stations are located;
| | - |  | ------------------------------------------------------------------------------------



| |  |  | pricing fluctuations in local and national advertising;
| | - |  | -------------------------------------------------------



| |  |  | the activities of our competitors, including increased competition from other forms of advertisingbased mediums, particularly network, cable television, direct satellite
television and radio, and the Internet;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the use of new services and devices which allow viewers to minimize commercial advertisements, such as satellite radio and personal digital video recorders; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | other factors that may be beyond our control.
| | - |  | ---------------------------------------------



A decrease in advertising revenue from an adverse change in any of the above factors could negatively affect our operating results and financial condition.



In addition, our results are subject to seasonal fluctuations. Excluding revenue from our
Seattle Radio agreement to broadcast Seattle Mariners baseball games during the regular baseball season, seasonal fluctuations typically result in second and fourth quarter broadcasting revenue being greater than first and third quarter broadcast
revenue. This seasonality is primarily attributable to increased consumer advertising in the spring and then increased retail advertising in anticipation of holiday season spending. Furthermore, revenues from political advertising are typically
higher in election years. Revenue from broadcasting Seattle Mariners baseball games is greatest in the second and third quarters of each year.



We have incurred losses in the past. We cannot assure you that we will be able to achieve profitability.



We incurred a net loss of $6.2 million for the six months ended June 30, 2005. In the full
fiscal year 2004, we had a net loss of $12.0 million. Although we have committed resources to (1) streamlining our broadcast operations and controlling expenses and (2) increasing our revenue, we cannot assure you that we will be successful in this
regard or that we will be able to achieve profitability in the future.



Our
indebtedness could materially and adversely affect our business and prevent us from fulfilling our obligations under our 8.625% senior notes due 2014



We currently have a substantial amount of debt. Our indebtedness could have a material adverse effect on our business. For example, it could:



| |  |  | increase our vulnerability to general adverse economic and industry conditions or a downturn in our business;
| | - |  | -------------------------------------------------------------------------------------------------------------



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| |  |  | reduce the availability of our cash flow to fund working capital, capital expenditures and other general business purposes;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------



| |  |  | reduce the funds available to purchase the rights to television and radio programs;
| | - |  | -----------------------------------------------------------------------------------



| |  |  | limit our flexibility in planning for, or reacting to, changes in our industries, making us more vulnerable to economic downturns; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------



| |  |  | place us at a competitive disadvantage compared to our competitors that have less debt.
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | limit our ability to make certain asset dispositions.
| | - |  | -----------------------------------------------------



If our indebtedness affects our operations in these ways, our business, financial condition, cash flow and results of operations could suffer, making it more difficult
for us to satisfy our obligations under the notes. Furthermore, the indenture governing our 8.625% senior notes due 2014 and our senior credit facility may permit us to incur substantial amounts of additional debt provided we meet certain financial
and other covenants.



Our operating results are dependent on the success of
programming aired by our television and radio stations.



Our advertising
revenues are substantially dependent on the success of our network and syndicated programming. We make significant commitments to acquire rights to television and radio programs under multiyear agreements. The success of such programs is
dependent partly upon unpredictable factors such as audience preferences, competing programming, and the availability of other entertainment activities. If a particular program is not popular in relation to its costs, we may not be able to sell
enough advertising to cover the costs of the program. In some instances, we may have to replace or cancel programs before their costs have been fully amortized, resulting in writeoffs that increase operating costs. For example, our Seattle and
Portland television stations, which account for approximately three-fourths of our television broadcasting revenue, are affiliated with the ABC Television Network, with the remainder of our television stations affiliated with CBS Television Network.
Popularity of programming on ABC has lagged behind other networks in the past few years. This has contributed to a decline in audience ratings, which negatively impacted revenues for our Seattle and Portland television stations. Weak performance by
ABC, a decline in performance by CBS, or a change in performance by other networks or network program suppliers, could harm our business and results of operations.



In May 2002, we acquired the radio broadcast rights for the Seattle Mariners baseball team for a term of six years, beginning with the 2003
baseball season. The success of this programming is dependent on some factors beyond our control, such as the competitiveness of the Seattle Mariners and the successful marketing of the team by the teams owners. If the Seattle Mariners fail to
maintain their current fan base, the number of listeners to our radio broadcasts may decrease, which would harm our ability to generate anticipated advertising dollars. On October 20, 2004, Major League Baseball announced an agreement with XM
Satellite Radio to broadcast every Major League Baseball game nationwide beginning with the 2005 regular season. Though we retain broadcast rights under the Rights Agreement, we are not yet able to assess the full impact of these broadcasts on our
business. Over time, the rebroadcasts could result in decreased listenership for our stations, the loss of regional sales growth opportunities and the loss of local advertisers that may not want their advertisements broadcast on a national scale.



The non-renewal or modification of affiliation agreements with major
television networks could harm our operating results.



Each of our
television stations affiliation with one of the four major television networks has a significant impact on the composition of the stations programming, revenue, expenses and operations. Our two largest television stations, KOMO, which
broadcasts in Seattle, Washington, and KATU, which broadcasts in Portland, Oregon, have affiliation agreements with ABC through 2009. For the six months ended June 30, 2005, approximately three-fourths of our television broadcasting revenues (and
nearly half of our total revenues) were derived from our ABC affiliated stations. During May 2005, we renewed our affiliation agreements with ABC Television Network, the terms of which included reduced network compensation from ABC. In addition, all
of our affiliation agreements with CBS will expire in February 2006. We cannot give any assurance that we will be able to renew our affiliation agreements with the networks at all, or on satisfactory terms, when they expire.



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If a network acquires a television station in a market in which we own a station affiliated with that network, the
network will likely decline to renew the affiliation agreement for our station in that market. The nonrenewal or modification of any of the network affiliation agreements could harm our operating results.



We are subject to the ongoing internal control provisions of Section 404 of the
Sarbanes-Oxley Act of 2002. Material weaknesses in internal control, if identified in future periods, could indicate a lack of proper controls to generate accurate financial statements.



Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 and related Securities and
Exchange Commission rules, we are required to furnish a report of managements assessment of the effectiveness of our internal controls as part of our Annual Report on Form 10-K for the fiscal year ending December 31, 2005. Our auditors are
required to attest to and report on, managements assessment, as well as provide a separate opinion. To issue our report, we document our internal control design and the testing processes that support our evaluation and conclusion, and then we
test and evaluate the results. There can be no assurance, however, that we will be able to remediate material weaknesses, if any, that may be identified in future periods, or maintain all of the controls necessary for continued compliance. There
likewise can be no assurance that we will be able to retain sufficient skilled finance and accounting personnel, especially in light of the increased demand for such personnel among publicly traded companies.



Competition in the broadcasting industry and the rise of alternative entertainment and
communications media may result in loss of audience share and advertising revenue by our stations.



Our television and radio stations face intense competition from:



| |  |  | local network affiliates and independent stations;
| | - |  | --------------------------------------------------



| |  |  | cable, direct broadcast satellite and alternative methods of broadcasting brought about by technological advances and innovations, such as pay-per-view and home video and
entertainment systems; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | other sources of news, information and entertainment, such as streaming video broadcasts over the Internet, newspapers, movie theaters and live sporting events.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



In addition to competing with other media outlets for audience
share, we also compete for advertising revenues that comprise our primary source of revenue. Our stations compete for such advertising revenues with other television and radio stations in their respective markets, as well as with other advertising
media such as newspapers, the Internet, magazines, outdoor advertising, transit advertising, yellow page directory, direct mail and local cable systems.



The results of our operations will be dependent upon the ability of each station to compete successfully in its market, and there can be no assurance that any one of our
stations will be able to maintain or increase its current audience share or revenue share. To the extent that certain of our competitors have, or may in the future obtain, greater resources, our ability to compete successfully in our broadcasting
markets may be impeded.



Because our cost of services are relatively fixed,
a downturn in the economy would harm our operations, revenue, cash flow and earnings.



Our operations are concentrated in the Northwest. The Seattle, Washington and Portland, Oregon markets are particularly important for our financial well-being. Operating results over the past several years were
adversely impacted by a soft economy, and any continuing weak economic conditions in these markets would harm our operations and financial condition. Because our costs of services are relatively fixed, we may be unable to significantly reduce costs
if our revenues decline. If our revenues do not increase or if they decline, we could continue to suffer net losses, or such net losses could increase. In addition, downturns in the national economy have historically resulted (and may in the future
result) in decreased national advertising sales. This could harm our results of operations because national advertising sales represent a significant portion of our television advertising net revenue.



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Radio and television programming revenue may be negatively affected by the cancellation of syndication agreements.



Syndication agreements are licenses to broadcast programs that are
produced by production companies. Such programming can form a significant component of a stations programming schedule. Syndication agreements are subject to cancellation, and such cancellations may affect a stations programming
schedule. The syndicator for several of our talk radio programs has acquired radio stations in the Seattle market and competes with our Seattle radio stations. We cannot assure you that we will continue to be able to acquire rights to such programs
once our current contracts for these programs expire. We may enter into syndication agreements for programs that prove unsuccessful, and our payment commitment may extend until or if the syndicator cancels the program.



A write-down of goodwill would harm our operating results.



Approximately $38 million, or 9% of our total assets as of June 30, 2005, consists of
unamortized goodwill. Goodwill is to be tested at the reporting unit level annually or whenever events or circumstances occur indicating that goodwill might be impaired. If impairment is indicated as a result of future annual testing, we would
record an impairment charge in accordance with accounting rules.



Foreign
hostilities and further terrorist attacks may affect our revenues and results of operations.



The September 11, 2001 terrorist attacks and the war in Iraq caused regularly scheduled programming to be pre-empted by commercial-free network news coverage of these events, which resulted in lost advertising
revenues. In the future, we may again experience a loss of advertising revenue and incur additional broadcasting expenses in the event that there is a terrorist attack against the United States or if the United States engages in foreign hostilities.
As a result, advertising may not be aired, and the revenue for the advertising on such days will be lost, adversely affecting our results of operations for the period in which this occurs. In addition, there can be no assurance that advertisers will
agree to run such advertising in future time periods or that space will be available for such advertising. We cannot predict the duration of such pre-emption of local programming if it occurs. In addition, our broadcasting stations may incur
additional expenses as a result of expanded local news coverage of the local impact of a war or terrorist attack. The loss of revenue and increased expenses could harm our results of operations.



Changes in FCC regulations regarding ownership have increased the uncertainty surrounding
the competitive position of our stations in the markets we serve.



In June
2003, the FCC amended its multiple ownership rules, including, among other things its local television ownership limitations, its prohibition on common ownership of newspapers and broadcast stations in the same market, as well as its local radio
ownership limitations. Under the amended rules, a single entity would be permitted to own up to three television station in a single market, to own more than one television station in markets with fewer independently owned stations, and the rules
would allow consolidated newspaper and broadcast ownership and operation in several of our markets. The new radio multiple ownership rules could limit our ability to acquire additional radio stations in existing markets that we serve. The
effectiveness of these new rules was stayed pending appeal. In June 2004, a federal court of appeals issued a decision which upheld portions of the FCC decision adopting the rules, but concluded that the order failed to adequately support numerous
aspects of those rules, including the specific numeric ownership limits adopted by the FCC. The court remanded the matter to the FCC for revision or further justification of the rules, retaining jurisdiction over the matter. The court has partially
maintained its stay of the effectiveness of those rules, particularly as they relate to television. The rules are now largely in effect as they relate to radio. The Supreme Court has declined to review the matter at this time, and the FCC must
review the matter and issue a revised order. We cannot predict whether, how or when the new rules will be modified, ultimately implemented as modified, or repealed in their entirety.



Legislation went into effect in January 2004 that permits a single entity to own television stations serving up to 39% of U.S. television
households, an increase over the previous 35% cap. Large broadcast groups may take advantage of this law to expand further their ownership interests on a national basis.



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We expect that the consolidation of ownership of broadcasting and newspapers in the hands of a smaller number of
competitors would intensify the competition in our markets.



The FCCs
extensive regulation of the broadcasting industry limits our ability to own and operate television and radio stations and other media outlets.



The broadcasting industry is subject to extensive regulation by the FCC under the Communications Act of 1934, as amended. Compliance with and the effects of existing and
future regulations could have a material adverse impact on us. Issuance, renewal or transfer of broadcast station operating licenses requires FCC approval, and we cannot operate our stations without FCC licenses. Our FCC licenses expire in 2005,
2006 and 2007. Failure to observe FCC rules and policies can result in the imposition of various sanctions, including monetary forfeitures, the grant of short-term (i.e., less than the full eight years) license renewals or, for particularly
egregious violations, the denial of a license renewal application or revocation of a license. While the majority of such licenses are renewed by the FCC, we cannot assure you that our licenses will be renewed at their expiration dates, or, if
renewed, that the renewal terms will be for eight years. If the FCC decides to include conditions or qualifications in any of our licenses, we may be limited in the manner in which we may operate the affected stations.



The Communications Act and FCC rules impose specific limits on the number of stations and
other media outlets an entity can own in a single market. The FCC attributes interests held by, among others, such entitys officers, directors, certain stockholders, and in some circumstances, lenders, to that entity for purposes of applying
these ownership limitations. The ownership rules may prevent us from acquiring additional stations in a particular market. We may also be prevented from engaging in a swap transaction if the swap would cause the other company to violate these rules.
We may also be prevented from implementing certain joint operations with competitors which might make the operation of our stations more efficient. Federal legislation and FCC rules have changed significantly in recent years and can be expected to
continue to change. These changes may limit our ability to conduct our business in ways that we believe would be advantageous and may thereby affect our operating results.



We may lose audience share and advertising revenue if we are unable to reach agreement with cable companies regarding the retransmission
of signals of our television stations.



On October 1, 2002, each of our
television stations sent notices to cable systems in their market electing must-carry or retransmission consent status for the period from January 1, 2003 through December 31, 2005. Stations electing must-carry may require carriage of their signal
on certain channels on cable systems within its market, whereas cable companies are prohibited from carrying the signals of stations electing retransmission consent unless an agreement between the station and the cable provider has been negotiated.
We elected retransmission consent status with respect to a number of key cable systems. We have executed retransmission consent agreements with all cable systems that we believe are material to the overall viewership of our stations. We must make
new carriage elections by October 1, 2005, and there is no assurance that we will be able to reach such agreements for periods commencing after December 31, 2005. Failure to do so may harm our business.



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Dependence on key personnel may expose us to additional risks.



Our business is dependent on the performance of certain key employees, including executive
officers and senior operational personnel. We generally do not enter into employment agreements with our key executive officers and senior operational personnel. We also employ several onair personalities who have significant loyal audiences
in their respective markets, with whom we have entered into employment agreements. We cannot assure you that all such key personnel or on-air personalities will remain with us or that our on-air personalities will renew their contracts. The loss of
any key personnel could harm our operations and financial results. On January 6, 2005, we announced the resignation of William Krippaehne, Jr. as our president and chief executive officer and that Benjamin W. Tucker was selected as acting president
and chief executive officer.



A reduction on the periodic dividend on the
common stock of Safeco Corporation may adversely affect our other income, cash flow and earnings. A reduction in the share price of Safeco Corporation may adversely affect our total assets and stockholders equity.



We own approximately 3.0 million shares of the common stock of Safeco Corporation, which, at
June 30, 2005, represented 38% of our assets and approximately 52% of our stockholders equity. Our investment in Safeco Corporation provided $2.3 million and $1.3 million in dividend income for the year ended December 31, 2004 and the six
months ended June 30, 2005, respectively. If Safeco Corporation reduces its periodic dividends, it will negatively affect our cash flow and earnings.



We will be required to make additional investments in HDTV technology, which could harm our ability to fund other operations or repay debt.



Although our Seattle, Portland, Eugene and Boise television stations currently comply with
FCC rules requiring stations to broadcast in high definition television (HDTV), our stations in smaller markets do not, because they are operating pursuant to special temporary authorizations issued by the FCC to utilize low power
digital facilities. We must construct full power digital facilities for our other stations by July 1, 2006, or they will lose interference protection for their digital channel. These additional digital broadcasting investments by our smaller market
stations could result in less cash being available to fund other aspects of our business or repay debt. The FCC has adopted a multi-step channel election and repacking process through which broadcast licenses and permittees will select their
ultimate DTV channel. The process is currently underway, and we have requested specific digital channels for each of our stations. We are unable to predict at this time whether our channel requests will be granted or which DTV channels we will be
able to obtain through this process. We have been advised by the FCC of a potential conflict between the channel requested for permanent use by our Coos Bay, Oregon, Television Station, KCBY, and the request of a television station owned by another
company, but are unable to predict whether that potential conflict will be resolved in a manner satisfactory to the Company.



Failure of our information technology systems would disrupt our operations, which could reduce our customer base and result in lost revenues. Our computer systems are
vulnerable to viruses, unauthorized tampering, system failures and potential obsolescence.



Our operations depend on the continued and uninterrupted performance of our information technology systems. Despite our implementation of network security measures, our servers and computer systems are vulnerable to
computer viruses, break-ins, and similar disruptions from unauthorized tampering with our computer systems. Our computer systems are also subject to potential system failures and obsolescence. Any of these events could cause system interruption,
delays and loss of critical data that would adversely affect our reputation and result in a loss of customers. Our recovery planning may not be sufficient for all eventualities.



We may experience disruptions in our business if we acquire and integrate new television or radio stations.



As part of our business strategy, we plan to continue to evaluate opportunities to acquire
television or radio stations. There can be no assurance that we will find attractive acquisition candidates or effectively manage the integration of acquired stations into our existing business. If the expected operating efficiencies from
acquisitions do not materialize, if we fail to integrate new stations or recently acquired stations into our existing business, or if the costs



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of such integration exceed expectations, our operating results and financial condition could be adversely affected. If we make acquisitions in the future, we
may need to incur more debt or issue more equity securities, and we may incur contingent liabilities and amortization and/or impairment expenses related to intangible assets. Any of these occurrences could adversely affect our operating results and
financial condition.



Our ownership and operation of Fisher Plaza is subject
to risks, including those relating to the economic climate, local real estate conditions, potential inability to provide adequate management, maintenance and insurance, potential collection problems, reliance on significant tenants, and regulatory
risks.



Revenue and operating income from, and the value of, Fisher Plaza
may be adversely affected by the general economic climate, the Seattle economic climate and real estate conditions, including prospective tenants perceptions of attractiveness of the property and the availability of space in other competing
properties. In addition, the economic conditions in the telecommunications and hightech sectors may significantly affect our ability to attract tenants to Fisher Plaza, since space at Fisher Plaza is marketed in significant part to
organizations from these sectors. Other risks relating to the operation of Fisher Plaza include the potential inability to provide adequate management, maintenance and insurance, and the potential inability to collect rent, due to bankruptcy or
insolvency of tenants or otherwise. Real estate income and values may also be adversely affected by such factors as applicable laws and regulations, including tax and environmental laws, interest rate levels and the availability of financing. We
carry comprehensive liability, fire, extended coverage and rent loss insurance with respect to Fisher Plaza. There are, however, certain losses that may be either uninsurable, not economically insurable, or in excess of our current insurance
coverage limits. If an uninsured loss occurs with respect to Fisher Plaza, it could harm our operating results.



Our operations may be adversely affected by earthquakes and other natural catastrophes in the Northwest.



Our corporate headquarters and all of our operations are located in the Northwest. The
Northwest has from time to time experienced earthquakes and experienced a significant earthquake on February 28, 2001. We do not know the ultimate impact on our operations of being located near major earthquake faults, but an earthquake could harm
our operating results. Our broadcasting towers may also be affected by other natural catastrophes, such as forest fires. Our insurance coverage may not be adequate to cover the losses and interruptions caused by earthquakes or other natural
catastrophes.



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ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS



The market risk in our financial instruments represents the potential loss arising from adverse changes in financial rates. We are exposed to market risk in the areas of interest rates and securities prices. These
exposures are directly related to our normal funding and investing activities.



Interest Rate Exposure



As a result of our September 20, 2004
placement of $150.0 million of 8.625% senior notes due 2014, substantially all of our debt as of June 30, 2005, is now at a fixed rate. As of June 30, 2005, our fixed-rate debt totaled $150.0 million. The fair value of long-term fixed interest rate
debt is subject to interest rate risk. Generally, the fair value of fixed interest rate debt will increase as interest rates fall and decrease as interest rates rise. Market risk is estimated as the potential change in fair value resulting from a
hypothetical 10% change in interest rates and, as of June 30, 2005, amounts to approximately $8.3 million. For fixed rate debt, interest rate changes do not impact book value, operations or cash flow.



Marketable Securities Exposure



The fair value of our investments in marketable securities as of June 30, 2005 was $163.1
million, compared to $157.1 million as of December 31, 2004. Marketable securities at June 30, 2005 consist of 3.0 million shares of Safeco Corporation common stock, valued based on the closing per-share sale price on the specific-identification
basis as reported on the Nasdaq stock market. As of June 30, 2005, these shares represented 2.3% of the outstanding common stock of Safeco Corporation. We have classified the investments as available-for-sale under applicable accounting standards. A
hypothetical 10% change in market prices underlying these securities would result in a $16.3 million change in the fair value of the marketable securities portfolio. Although changes in securities prices would affect the fair value of the marketable
securities and cause unrealized gains or losses, such gains or losses would not be realized unless the investments are sold.



ITEM 4 - CONTROLS AND PROCEDURES



The
Companys Acting Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Companys disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934,
as amended (the Exchange Act)) and, based on their evaluation, the Acting Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the Companys fiscal quarter ended June 30, 2005, these disclosure
controls and procedures are effective in ensuring that the information that the Company is required to disclose in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods
specified in the Commissions rules and forms, and that, as of the end of the Companys fiscal quarter ended June 30, 2005, the disclosure controls and procedures are effective in ensuring that the information required to be reported is
accumulated and communicated to the Companys management, including its Acting Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.



We did not make any changes in internal control over financial reporting during the second
fiscal quarter of 2005 that materially affected or is reasonably likely to materially affect our internal control over financial reporting. We intend to continue to refine our internal control on an ongoing basis as we deem appropriate with a view
towards continuous improvement.



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PART II



OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------



The Company and its subsidiaries are parties to various claims, legal actions and complaints in the ordinary course of their businesses. In the Companys opinion, all such matters are adequately covered by
insurance, are without merit or are of such kind, or involve such amounts, that unfavorable disposition would not have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company.



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------



None



|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------



None



|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------



The Annual Meeting of Shareholders was held April 28, 2005.



The three nominees elected to the Board of Directors for three-year terms expiring in 2008 are listed below. There were no broker non-votes with respect to any of the
nominees.



|                       |  |           |  |               
|---------------------- |  | --------- |  | --------------
|                       |  | Votes for |  | Votes withheld
|Richard L. Hawley      |  | 7,292,452 |  | 33,358        
|George F. Warren, Jr.  |  | 7,290,766 |  | 35,044        
|William W. Warren, Jr. |  | 7,307,236 |  | 18,574        



Continuing as Directors are James W.
Cannon, Phelps K. Fisher, Deborah L. Bevier and Jerry A. St. Dennis, whose terms expire in 2006 and Carol Fratt, Donald G. Graham, Jr. and Donald G. Graham, III, whose terms expire in 2007.



|Item 5. | Other Information
|------- | -----------------



None



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|Item 6. | Exhibits
|------- | --------



|(a) | Exhibits:
|--- | ---------



|      |  |                                                                                                                                                                                                 
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1   |  | Amended and Restated Bylaws of Fisher Communications, Inc., effective July 28, 2005 (incorporated by reference to Exhibit 3.1 to the Companys Current Report on Form 8-K dated August 2,
2005).
|      | 
|10.1* |  | Letter agreement with Robert C. Bateman dated June 16, 2005 (incorporated by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K dated June 16, 2005).                        
|      | 
|10.2* |  | Restricted stock rights grant agreement with Robert C. Bateman dated June 14, 2005.                                                                                                             
|      | 
|10.3 |  | Renewal Letter Agreements dated May 6, 2005 between American Broadcasting Companies, Inc. (ABC) and Fisher Broadcasting Company, Inc.                                                         
|      | 
|31.1  |  | Certification of Chief Executive Officer.                                                                                                                                                       
|      | 
|31.2  |  | Certification of Chief Financial Officer.                                                                                                                                                       
|      | 
|32.1  |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                              
|      | 
|32.2  |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                              



| | Certain information in this exhibit has been omitted and filed separately with the Commission pursuant to a confidential treatment request under 17 C.F.R. Sections 200.80(b)(4),
200.83 and 230.406.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|* | Management contract or compensatory plan
|- | ----------------------------------------



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SIGNATURES



Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                      |  |  |  |                                                  
|--------------------- |  |  |  | -------------------------------------------------
|                      |  |  |  | FISHER COMMUNICATIONS, INC.                      
|                      |  |  |  | (Registrant)                                     
|                      |  | 
|Dated: August 8, 2005 |  |  |  | /s/ Robert C. Bateman                            
|                      |  |  |  | Robert C. Bateman                                
|                      |  |  |  | Senior Vice President and Chief Financial Officer



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EXHIBIT INDEX



|            |  |                                                                                                                                                                                                 
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                     
|3.1         |  | Amended and Restated Bylaws of Fisher Communications, Inc., effective July 28, 2005 (incorporated by reference to Exhibit 3.1 to the Companys Current Report on Form 8-K dated August 2,
2005).
|            | 
|10.1*       |  | Letter agreement with Robert C. Bateman dated June 16, 2005 (incorporated by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K dated June 16, 2005).                        
|            | 
|10.2*       |  | Restricted stock rights grant agreement with Robert C. Bateman dated June 14, 2005.                                                                                                             
|            | 
|10.3       |  | Renewal Letter Agreements dated May 6, 2005 between American Broadcasting Companies, Inc. (ABC) and Fisher Broadcasting Company, Inc.                                                         
|            | 
|31.1        |  | Certification of Acting Chief Executive Officer.                                                                                                                                                
|            | 
|31.2        |  | Certification of Chief Financial Officer.                                                                                                                                                       
|            | 
|32.1        |  | Certification of Acting Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                       
|            | 
|32.2        |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                              



| | Certain information in this exhibit has been omitted and filed separately with the Commission pursuant to a confidential treatment request under 17 C.F.R. Sections 200.80(b)(4),
200.83 and 230.406.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|* | Management contract or compensatory plan
|- | ----------------------------------------



39